What is meant by "settlement" in real estate transactions?

Settlement in real estate transactions refers to the process of finalizing all paperwork and transferring ownership of the property. This step is a critical phase where both the buyer and seller fulfill their respective obligations, ensuring that any required disclosures, inspections, and financing matters are completed. During settlement, a settlement agent or attorney typically oversees the proceedings, which culminate in the signing of documents such as the deed and mortgage agreements.

The settlement process also involves transferring funds—often through escrow—where the buyer pays the purchase price, and the seller receives the proceeds from the sale. After these actions, the ownership of the property officially changes hands. This is pivotal, as it is the formal conclusion of the purchase agreement, making it a key part of any real estate transaction. Understanding this process is important for all parties involved, as it affects legal ownership and the rights associated with the property.