settlement process

A wide-ranging term for the process of completing a trade or a sale. In real estate, settlement is the formal process of transferring the title of the real estate from the seller to the buyer. Also during the settlement process, a lien is applied against the property for the benefit of the mortgage lender. The real estate settlement process is governed by the Real Estate Settlement Procedures Act of 1974, which requires that the lender thoroughly explain the settlement process. In a brokerage firm, settlement involves matching buyers’ and sellers’ transactions and transferring the funds and securities to the appropriate party.