TL;DR: During the buying, selling or refinancing process of your home a real estate lawyer will complete the paperwork correctly and manage the handling of money through their trust accounts. The documents that show all of the money, all the fees and deductions, and what goes where, are the statement of adjustments and the trust ledger statement.

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Statement of Adjustments

The statement of adjustments shows the total amount of money that will need to change hands between the buyer and seller of a real estate transaction. Things like prepaid property taxes, condo fees, utlities and homeowner association fees are all things that the seller will want to be reimbursed for up to the date the new owner takes over ownership. Likewise, the buyer will want to be sure that if they are reimbursing the seller for these items, that they are not double-paying. This is accomplished by deducting these adjustments from the amount of money paid to the seller on closing day. The statement of adjustments also gives the buyer credit for the deposit they made during the offer process.

Trust ledger statement

The trust ledger shows how the money coming in to the trust account is spent. This is a key document because it will also show the amount called "cash to close" or the amount of money you need to bring with you to the lawyer's office to complete the purchase.

The "received from bank" line item is the amount of mortgage money received by the lawyer from the lender. This is equal to total mortgage amount, minus any holdbacks or deductions from the lender (like default insurance fees, which are added to the mortgage but paid directly to the default insurers).

The amount required from you to close the transaction will be equal to your total down payment, minus the deposit you paid with your offer, plus any adjustments required, and plus any fees such as title insurance, legal fees, or property transfer taxes.

Refinances only require a trust ledger, and no statement of adjustments

If you are looking to refinance your home, your lawyer will only have to create a trust ledger for you. It will function much the same way except the amounts of the "Expenses" side will reflect paying out the old mortgage amount, legal fees, and perhaps any debt payouts that may be part of the transaction.

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