Draft Settlement Statement

Skill: Draft Settlement Statement for Commercial Property Closing with Prorations, Lien Payoffs, and Assumed Lease

1. Subject-matter triage (only if applicable)

• Determine whether the closing involves one property or multiple parcels, one lease or multiple occupancy arrangements, and one payoff or multiple secured claims; if more than one item exists, treat each as a separate closing component and reconcile it independently before combining totals.
• Identify which dates control the economics: contract date, closing date, rent-period cutoffs, tax bill dates, payoff good-through dates, and any assumed-lease commencement or assignment date.
• Separate hard closing items from post-closing carryovers: amounts settled at closing, amounts held in escrow, and obligations that survive closing but are documented in the notes memo.

2. Failure modes the skill is correcting

• The statement shows a net number without displaying the underlying proration math, making review impossible.
• The drafting applies a generic closing convention instead of the governing contract’s allocation rules for prorations, delinquent items, deposits, and closing costs.
• The statement balances on paper but misallocates lender payoffs, tax items, rent, deposits, or holdbacks between buyer and seller.
• The notes memo is omitted or is too thin to capture assumptions, gaps, and date-sensitive items that could change the economics.
• The closing package treats the assumed lease as background context instead of a current cash-flow item that affects proration, transfer of deposits, and post-closing responsibility.
• The statement fails to reconcile all columns back to the purchase price and other closing adjustments, leaving unexplained residuals.

3. Legal frameworks / domain conventions that apply

• Use the purchase agreement’s express allocation provisions as the controlling framework for all adjustments, and do not substitute local custom where the contract is specific.
• Apply standard settlement-statement practice: itemize debits and credits by party, then reconcile to a bottom-line amount for seller proceeds and buyer funds required.
• Prorate recurring items by the contract’s chosen accrual method and cutoff date; where the contract is silent, use the transaction’s stated convention consistently across all recurring charges.
• Treat property taxes according to the applicable jurisdiction’s billing convention and lien status, and distinguish current-period accrual from arrears settlement.
• Treat rent and occupancy amounts according to the lease and assignment language, including assumptions about the exact closing-day allocation and any delinquency carveout.
• Transfer security deposits, reserve balances, and similar tenant-held funds only as permitted by the lease, the assignment documents, and applicable landlord-tenant law.
• Allocate payoff items using the payoff statement’s good-through date and interest accrual mechanics; update the payoff if the closing date moves.
• Place transfer taxes, deed recording fees, satisfaction fees, title premiums, and escrow charges in the column assigned by the contract and local practice.
• Treat repair escrows, holdbacks, and similar deferred amounts as seller-side debits unless the source documents expressly provide a different structure.
• If the seller signs in a representative or fiduciary capacity, confirm the authority and any required approvals before treating the closing as executable.
• Support every legal or allocation conclusion with the governing source provision, statute, regulation, or standard closing convention relied on for that item.

4. Analytical scaffolds

• Read the closing documents as a single economic package: purchase agreement, lease or assignment, rent roll, tax statements, payoff letters, estoppels, escrow instructions, and closing checklist.
• Build the statement item by item, then reconcile the itemized schedule to the purchase price and all add-ons, deductions, payoffs, and holdbacks.
• For each recurring proration, show the basis, the relevant period, the daily rate or equivalent unit rate, the seller-side allocation, and the resulting amount.
• For each payoff, confirm the amount, the good-through date, and whether closing falls inside that window; if not, flag the need for an updated payoff.
• For deposits and tenant-related balances, compare the rent roll, lease, and any estoppel or schedule of deposits; flag mismatches and state which document is being treated as controlling.
• For taxes and assessments, confirm whether the item is current, delinquent, prepaid, or pending; treat each category separately so the settlement does not mix accrual with payoff.
• For closing fees and transaction charges, verify whether each is buyer-side, seller-side, or split, and note the source for the allocation.
• For any unresolved item, state the assumption used in the statement and isolate the change that would follow if the assumption proves wrong.
• Reconcile the final buyer funds and seller net proceeds against the transaction economics before finalizing the document.

5. Vertical / structural / temporal relationships (only if applicable)

• When a closing date is near a period boundary, a one-day change can shift prorations, payoff interest, and occupancy charges; the notes memo must identify the assumed date and the items sensitive to movement.
• Where an assumed lease transfers at closing, the rent proration, security deposit transfer, and post-closing tenant obligations must be aligned so the economic handoff is internally consistent.
• If a payoff statement or tax figure is dated before the expected closing date, note the revalidation trigger and the document that must be refreshed.
• If a holdback or escrow is to be released later, describe the release condition and the party responsible for administering it so the closing statement and notes remain consistent.

6. Output structure conventions

• Draft the settlement statement first and ensure it is complete and non-empty before preparing the notes memo.
• Use a conventional dual-column settlement-statement layout with seller-side and buyer-side columns, grouped by transaction category rather than by source document.
• Include separate proration schedules for each recurring item that needs computation, and keep each schedule self-contained so it can be audited independently.
• Include a reconciliation summary that ties the statement back to the purchase price and shows how the bottom-line net figures were reached.
• The notes memo should be a separate advisory document that lists assumptions, discrepancies, missing information, and items that may change if dates or source documents change.
• State in the notes memo which source document governs each contested or uncertain item, and identify any place where the statement reflects a reasonable assumption rather than confirmed closing data.
• Keep filenames exactly as instructed: settlement-statement.docx for the statement and settlement-statement-notes.docx for the notes memo.
• Before finishing, confirm that both files exist, are non-empty, and contain operative content rather than a summary of what should be drafted.