What is a reduction certificate primarily used for in the settlement process?

A reduction certificate is primarily used to indicate the loan amount required to pay off a loan during the settlement process. This document serves a critical role in finalizing a transaction by providing accurate information about the outstanding balance on a loan associated with a property. It typically reflects the current status of the loan and ensures that all parties involved in the transaction are aware of the exact amount that must be paid to satisfy the loan obligations before the transfer of ownership can occur.

This is particularly important for buyers and sellers to avoid any potential misunderstandings regarding the financial aspects of the transaction. The reduction certificate is often used in conjunction with other documents during the closing process to facilitate a smooth and transparent transfer of property ownership.