What is a settlement statement?

Near the end of a Virginia closing, the seller and the buyer each sign a set of figures. It looks like paperwork confirming what already happened. Legally it can work the other way: once signed, it is a written instruction the statute accepts for paying out the money held for the closing.

Funds held in an escrow account shall be disbursed only pursuant to a written instruction or agreement specifying how and to whom such funds may be disbursed.

Va. Code 55.1-1008

The next sentence of the same subsection names the document that meets that requirement: "A settlement statement or closing disclosure that has been signed by the seller and the purchaser or borrower shall be deemed sufficient to satisfy the requirement of this subsection."

Signed, the statement says how much goes to whom. Each payoff, tax and fee printed on it is a payment the signatures approve, and each credit shifts what one side owes the other. That is the reason to read it line by line at the table rather than sign the totals. Under the same chapter, a settlement agent is a person, other than a party, who provides closing services and is listed as the settlement agent on the settlement statement or Closing Disclosure.

Because the document is a statement of receipts and disbursements, it reads as two movements of money for each side: what that side brings or is credited, and what is paid out on its behalf.

• The price and the deposit. The contract price, and a credit for any earnest money already held, so the deposit is not counted twice.
• Payoffs. Any loan secured against the land, paid from the seller's proceeds. Ordering payoffs is one of the settlement services Virginia's statute lists.
• Tax lines. Any split of the year's real estate taxes, computed as explained in how property taxes are prorated at closing, and a proration credit moves money between buyer and seller rather than to an outside payee.
• The grantor tax. Virginia names the grantor as its payer unless the parties arrange otherwise, so which column it lands in follows the contract.
• Recording, title and settlement charges. The costs of recording the documents, the title work and the settlement agent's own services. What counts among closing costs is defined separately, and who pays closing costs in Virginia is its own question.

A figure marked as an estimate is not a mistake in itself. Va. Code 55.1-1009 bars a settlement agent from intentionally making a materially false or misleading entry on a settlement statement or Closing Disclosure, and says a good faith estimate of charges, indicated as such, is not a violation. Ask the settlement agent what an estimated figure depends on before signing.