At our real estate school last evening a student asked about access to the HUD-1. The question was how long before the closing must it be made available and to whom?

First, the HUD-1 is a statement that summarizes all of the charges in a real estate transaction.

The answer is that the borrower has the right to inspect the HUD-1 one business day before the settlement (closing). Yet, the fully completed HUD-1 must only be delivered at the settlement (closing).

So what is the difference between inspection and delivery?

Under Regulation X, which promulgates the inspection rule for a HUD-1, § 3500.10 provides:

One-day advance inspection of HUD-1 or HUD-1A settlement statement; delivery; recordkeeping

(a) Inspection one day prior to settlement upon request by the borrower. The settlement agent shall permit the borrower to inspect the HUD-1 or HUD-1A settlement statement, completed to set forth those items that are known to the settlement agent at the time of inspection, during the business day immediately preceding settlement. Items related only to the seller's transaction may be omitted from the HUD-1.

(b) Delivery. The settlement agent shall provide a completed HUD-1 or HUD-1A to the borrower, the seller (if there is one), the lender (if the lender is not the settlement agent), and/or their agents. When the borrower's and seller's copies of the HUD-1 or HUD-1A differ as permitted by the instructions in Appendix A to this part, both copies shall be provided to the lender (if the lender is not the settlement agent). The settlement agent shall deliver the completed HUD-1 or HUD-1A at or before the settlement, except as provided in paragraphs (c) and (d) of this section.

(c) Waiver. The borrower may waive the right to delivery of the completed HUD-1 or HUD-1A no later than at settlement by executing a written waiver at or before settlement. In such case, the completed HUD-1 or HUD-1A shall be mailed or delivered to the borrower, seller, and lender (if the lender is not the settlement agent) as soon as practicable after settlement.

(d) Exempt transactions. When the borrower or the borrower's agent does not attend the settlement, or when the settlement agent does not conduct a meeting of the parties for that purpose, the transaction shall be exempt from the requirements of paragraphs (a) and (b) of this section, except that the HUD-1 or HUD-1A shall be mailed or delivered as soon as practicable after settlement.

(e) Recordkeeping. The lender shall retain each completed HUD-1 or HUD-1A and related documents for five years after settlement, unless the lender disposes of its interest in the mortgage and does not service the mortgage. In that case, the lender shall provide its copy of the HUD-1 or HUD-1A to the owner or servicer of the mortgage as a part of the transfer of the loan file. Such owner or servicer shall retain the HUD-1 or HUD-1A for the remainder of the five-year period. The Secretary shall have the right to inspect or require copies of records covered by this paragraph (e).

There appears to be a clear difference between an inspection and delivery, but not one that is actually articulated. In such, a good lawyer will look to case law. Nonetheless, a search of the case law only revealed one case and in that case the Court stated: "In any event, it appears that a violation of § 2603 would not give rise to a private right of action. See, e.g., Bloom v. Martin, 865 F. Supp. 1377, 1384 (N.D. Cal. 1994) ("The structure of RESPA's various statutory provisions indicates that Congress did not intend to create a private right of action for disclosure violations under 12 U.S.C. § 2603.")."

Therefore, I ask, what is the difference in what it means, since the buyer probably won't enforce a violation anyway.

As to the question of who can inspect, its likely that the buyer or his representative can inspect. Yet, the regulation only states buyer, which would mean the buyer or someone holding a valid power of attorney.

To the great real estate agent who brought up this question, my answer to you is that you cannot force the bank attorney to show you a proposed HUD-1 in advance. Sorry.

Pick Up July's Homes of Eastern Long Island magazine issue. Page 50, Andrew's Article "Help from HANFRA". Here's a copy of the text.


Help from HANFRA

My phone rang and my paralegal said Joshua Horton is on the phone. Recalling a recent article that I had read about Mr. Horton being named the newest President of the Hamptons and North Fork REALTORS@ Association (HANFRA), I quickly grabbed the phone to appease my curiosity about the call. Mr. Horton and I had never met before, but my law firm had worked with some of his agents at Corcoran in the past on a number of real estate transactions, so I wondered if this was about a new deal (Mr. Horton is a Senior Managing Director at The Corcoran Group and has direct oversight of the company’s Shelter Island, North Fork and Westhampton Beach markets). It was not about a real estate deal, but instead a deal between my law firm, Lieb at Law, P.C., and HANFRA. Mr. Horton was calling because he had a vision for the future of HANFRA and wanted to collaborate with my law firm to achieve his goals. Mr. Horton knew that my law firm had owned and operated a New York State licensed real estate school for the previous two years and that we were becoming known as a leader in real estate education throughout Long Island. As the new President of HANFRA, he wanted to bring The Real Estate School to the membership of his association because he believes, as stated to me, that the Twin-Forks must lead the rest of Long Island in learning and practicing at the cutting-edge of the industry. During our conversation, Mr. Horton also stated to me that many of his own staff had attended my classes and that he felt the collaboration would be mutually beneficial. He knew that The Real Estate School by Lieb at Law was a pro-bono project, which did not charge for classes and in appreciation of this charitable endeavor, he offered his help to minimize costs to the firm by helping to find both venues to host our classes and partners to provide food and refreshments. In exchange, Mr. Horton asked for courses throughout the Twin-Forks and for the development of additional courses to address topics of need tailored to the local markets. Mr. Horton was correct, it was a perfect match.

The Real Estate School by Lieb at Law is the pro-bono arm of my law firm, which currently offers five continuing education courses, at three credits, each counting towards the 22.5 credits required to maintain a real estate license over the course of two years, in New York State. The five courses offered are: (1) Foreclosure and the Economy: the short sale course; (2) Mold is Money; (3) Discovering the Home Inspection; (4) Commercial Real Estate: an introductory course; and (5) Mortgage Mania. To register for any of these courses, please go to www.liebatlaw.com.
Of interest to the readership of Homes of the Hamptons and Homes of Eastern Long Island, Mary Thames Louis, Claudette Keeton, and Kathy Silvanovich of the magazines, were the first in the community to identify that my law firm was addressing a serious need in the Twin-Forks through our local free courses and made their magazines the first sponsor/partner of this project. My gratitude to these three outstanding professionals and to the magazines, which they run, must be expressed. Without their support, free continuing education for real estate agents throughout the Twin-Forks would just be a dream, but with them, it’s a reality.

Last week, The Real Estate School offered our first class to HANFRA in Southold at Sea Tow. We thank Sea Tow for being a gracious host and both Rolling in Dough Pizza and Sacredsweets for providing food and refreshments. Upcoming classes are scheduled in Southampton, at TD Bank in Westhampton Beach, and at Lieb Family Cellars in Mattituck. Keep an eye on www.liebatlaw.com for more locations throughout the coming months. These companies believe in the future of our great community and enhancing the professionalism of our real estate industry. Mr. Horton, thank you for your leadership.

Don't forget to pick up the latest issue of Homes of Eastern Long Island magazine. Checkout Andrew's recent article on page 50 - about The Real Estate School's collaboration with HANFRA.

To be clear, this great news only applies to eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April. So new contracts are not part of the extension.

The extension was made available as part of The Homebuyer Assistance and Improvement Act of 2010.

Now eligible taxpayers have 3 more months to close!!!

To receive the credit, eligible taxpayers must fill out Form 5405 and include the HUD-1. Good luck and have a great July 4th weekend.

President Obama plans to extend a deadline for homebuyers to complete purchases and qualify for an $8,000 tax credit according to the White House.

Under the extension, qualified homebuyers who signed purchase contracts before April 30 will have until Sept. 30 to complete paperwork and settle on the house. The original settlement deadline was June 30, 2010.