A reimbursement statement is the final settlement of financial accounts between buyer and seller in a property transaction.
It covers all the costs that the seller has paid prior to the handover date, and that extend into the buyer’s ownership period.
You can read more below about what a reimbursement statement typically includes, when the refund is made, and who draws up the reimbursement statement.
What is a reimbursement statement?
When you own a house or an apartment, there are a number of expenses that must be paid in advance. When a property is placed on the market and a potential buyer puts in an offer, the seller will have a number of expenses that are charged periodically in advance. The buyer is obliged to pay these expenses from the moment they take over the property, and this is where the reimbursement statement comes into the picture.
A reimbursement statement makes it possible to form an overview of the buyer’s and seller’s financial accounts. A reimbursement statement is thus a statement of all the costs, which the seller has paid in advance for various consumption meters, and which the buyer must therefore pay to the seller – for example, property tax, waste removal, landowner association fees, and any remaining oil reserves.
In connection with the sale, it can also be agreed that the seller must refund the buyer an agreed amount on top of the reimbursement of closing costs to cover any latent defects.
The purpose of a reimbursement statement is that the buyer and the seller only bear those expenses that are attached to their individual period of ownership and own consumption. Fixed costs, such as property taxes, are refunded on the handover day, while usage fees are refunded on the completion date, which takes place before the handover day itself.
What does a reimbursement statement include?
There is no cheat sheet to show you what a reimbursement statement will contain. The contents of a reimbursement statement can thus vary from one to the next, as they depend, among other things, on the type of property it refers to.
There are, however, a number of entries that will typically be present on most reimbursement statements:
- Repayment of property taxes
- Water and sewerage tax
- Waste removal and chimney-sweeping
- Membership fees to landowner association (when buying/selling a house)
- Shared expenses (HOA fees) to a homeowner association (when buying/selling a condominium)
- Change of ownership insurance (when buying/selling a house)
- Negative interest
As mentioned, there can be entries in the list above that are not included in a reimbursement statement in connection with buying a property. In most cases, there will also be entries that are not listed above and that are included in the reimbursement statement. This list must therefore be seen solely as an example of some of the most typical entries you might see.
For the same reason, it can be a good idea to contact a professional adviser or buyer’s agent, who can draft the reimbursement statement or review it for you. In this way you can be sure that it includes all the points that are relevant in connection with your property purchase.
Who drafts a reimbursement statement?
There are no legal requirements that dictate who should draw up the statement. It can therefore be both the buyer and the seller who carry the responsibility. It will, however, be stated in the purchase agreement whether it is the seller’s or the buyer’s representative who is responsible for drafting the reimbursement statement.
Most often, a reimbursement statement is prepared by the buyer’s representative, just as it is usual for the buyer to take responsibility for drawing up the deeds in connection with a property transaction. Once the reimbursement statement has been drafted, it will be clear who owes money to whom. In certain cases, there may be entries that the buyer pays in arrears, and which the seller must then compensate them for.
If it turns out that the buyer is owed money, this amount will be offset against the total purchase price when the buyer transfers the money. If, on the other hand, it is the seller who is owed money, as is most often the case, the buyer must transfer the owed amount into the seller’s bank account or equivalent. This amount will therefore not be added to the purchase price.
If the seller or the seller’s representative is responsible for drafting the reimbursement statement, then it is also crucial that you have this reviewed by a buyer’s agent. This way you can be sure that you are not paying more to the seller’s share than you are actually obliged to.
What if the buyer takes over the property before the handover date?
Even if a handover date has been given, it may also be possible for the buyer to be handed the keys earlier than the agreed handover date stated in the purchase agreement. If the buyer moves into the house or apartment before the handover date, it is typical to take readings from several meters in connection with the key handover.
Generally, the reimbursement statement will also be drafted so that it is valid from the actual day when the seller takes possession of the property and not from the handover date that is stated in the agreement between the buyer and seller. This depends, however, on what is agreed between the buyer and seller.
From the moment the buyer takes possession of the property, they also take over responsibility for the house. The buyer is therefore also obliged to take out home insurance, assuming there is a mortgage loan involved, which there usually is in standard house sales.
Get help from Minkøblermægler.dk with your reimbursement statement
Should we help you draft or review the reimbursement statement?
Here at Minkøbermægler.dk, we have experience with preparing reimbursement statements. Whether you’re a first-time buyer or have invested in real estate before, we can help to ensure that the content of your reimbursement statement matches overall with reality, and that the statement is not solely in the seller’s favor.
We can help you to prepare and review a reimbursement statement and deeds, but we can also offer you advice throughout the entire home-buying process, so you can be sure that you’re making the right decisions along the way. Contact us today for a free and non-binding chat about your options.
Note, the real estate agent is hired by seller and represents seller’s interests throughout the whole process, while the buyer’s agent exclusively represents the interests of the buyer.
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