What does settlement refer to in real estate?

Settlement in real estate refers specifically to the final step in the transaction process where the actual transfer of ownership occurs. During settlement, all necessary documents are signed, and funds are exchanged, culminating in the buyer officially taking possession of the property. This phase is critical as it completes the process that began with the initial negotiations and culminates in the legal transfer of the title.

While the negotiation process for property terms is an important part of real estate transactions, it takes place prior to settlement and does not encompass the concluding actions that finalize the sale. The acceptance of an offer is a necessary step leading up to settlement, but it does not represent the culmination of all activities involved in the real estate transaction. Lastly, property inspections are conducted earlier to assess the property’s condition and negotiate repairs, which again precedes the settlement stage. Thus, definition and role of settlement are distinct as the pivotal moment that legally concludes the transaction.