When is a HUD-1 form required?

Seller in cash deal underestimates document's value

DEAR BENNY: Do we have to do a HUD-1 form on a cash sale? The home is paid off and I am selling for cash. There is no lender involved. –Keith

DEAR KEITH: The answer is no. For my readers, a HUD-1 is the settlement statement that is used for most residential closings (called settlements or escrows in different parts of the country).

HUD stands for the Department of Housing and Urban Development. When Congress enacted the Real Estate Settlement Procedures Act (RESPA) many years ago, it authorized HUD to prepare and implement a uniform settlement statement.

Recently, this form was updated with the view toward assisting potential homebuyers to fully understand their closing costs, and to be able to shop and compare settlement (escrow) companies.

The HUD-1 must be used in any transaction where a federally regulated mortgage (deed of trust) is involved. In your case, because you are selling for cash, you don’t need to use that form.

However, it’s a good form, and can be of assistance to you and your buyer when you both are preparing your income tax returns. So, although it’s not really necessary, I would still consider using it for your transaction.

DEAR BENNY: We live in a condominium complex. Recently, we had to replace our two outside heat pumps. About two weeks after the installation, we received a letter from our local electric power company stating that our units were too close to the electric meters. (From what I understand they need to be at least 30 inches from the meters.) We were given 30 days to have the new units moved.

The power company told us that one of our residents, who claims to be with Homeland Security, reported the violation. The units had been moved at no cost to us. Later, I checked the other units in our complex and noted seven violations the same as ours.

I called the power company and they said they had not been notified of other violations. I also reported this to the board and no further actions have been taken. Do I have any recourse for being singled out by the association, board or individual board member? –Michael

DEAR MICHAEL: Get over it; life’s too short to fight this issue, especially since you did not have to pay to move the equipment.

But more to the point: Are you sure that the other units you saw fall within the same regulations as yours? Are they the same brands, or were they installed before the regulation went into effect? You really have to document your case carefully before you can make any allegations.

And are you sure that this Homeland Security person reported you? If so, why did he do it? Was he possibly concerned about a fire or other catastrophe as a result of your equipment being too close to the electric meters?

There are too many unanswered questions here to warrant any recourse.

DEAR BENNY: My stepmother has Alzheimer’s disease after suffering a stroke about a year ago. She is 89 years old. She lives in Arizona, and I live in New York. My father passed away nine years ago at 83. Before the stroke, my stepmother told me in a letter that when she passed away she gave instructions to her daughter on her will that the property was to be divided three ways: myself and her two daughters.

Since my stepmother’s stroke, my stepsister has moved into the house with her grown son to care for her mother. My stepsister mentioned a while ago that her son would like to buy the house, but when I asked her about it several times since that conversation she doesn’t answer me. The oldest sister passed away several years ago so it’s just the two of us.

I feel uneasy about this situation. Where do I stand legally? I have always had a good relationship with my stepsisters and stepmother, I haven’t visited them since my father passed, but I keep in touch either by phone or email. That was my father’s house, too. Should I be worried? Or am I making a big thing out of nothing? –Lynn

DEAR LYNN: No, you are not making a big deal out of this, but I can see from the tone of your letter that you are concerned.

First, I have to repeat what I have been telling clients for years: Children cannot — and should not — control how their parents will dispose of their real estate, their jewels or their money.

Clearly, children can make sure that their parents have current and updated last wills and testaments, but the substance of those documents is in the sole discretion of the maker of the will.

Having said that, I am not sure what you can do until your stepmother dies. She has had a stroke and I suspect that she is not currently capable of discussing this with you — or anyone else, for that matter.

You indicated that your stepsister is named as the executor (personal representative) of the will. Accordingly, you will have to wait.

Once your stepmother dies, you should retain a lawyer in the state where probate will take place. If the will that your stepsister files with the court is different from what your stepmother told you, you have the right to try to challenge the validity of that document. However, your stepmother also has the right to change her mind.

DEAR BENNY: I currently rent a single room in a three-bedroom, two-bath home with a two-car, detached garage. My two housemates and I pay rent to a property management company. We, however, have an untenable situation with the property owner.

He travels the country playing in a band, but when he’s back in town he resides in our garage, which has only a bed, dresser, TV and most of his belongings.

The garage has not been converted for a living situation, so the owner freely comes into the main house to use the bathroom to shower and groom himself, all the while using our personal items. This continues with the use of the indoor laundry, eating food from the fridge, and "borrowing" our DVDs and "splicing" into the cable so he can watch TV in the garage.

When I confronted the owner he said, "It’s my house and I can do what I want." I feel so violated and uncomfortable even in my own room that I stopped paying rent, for which he immediately served me eviction papers.

What are my rights in this situation? Was I justified in not paying rent? –Chad

DEAR CHAD: You have raised one of the most difficult issues involving landlord-tenant law: "Am I justified in not paying rent when I have a problem with my landlord or in my house?"

My experience tells me that it is not a good idea to withhold the rent — regardless of the reason. Judges that handle landlord-tenant cases hear all kinds of excuses — some legitimate and some wildly fictitious. Judges sometimes believe that the tenant just does not have the money and is thus fabricating an excuse not to pay.

My suggestion: You should give your rent to a third party — usually your attorney — to hold in escrow. That shows good faith on your part.

Clearly, however, your landlord has no right to interfere with your privacy and your right to peaceful enjoyment of the home. I hope you have a good attorney to defend you in the eviction procedure. I suspect you will prevail.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

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