The purchase or sale of a home is for most people the biggest financial transaction that they will be involved in. And with hundreds of thousands of dollars changing hands, every penny must be accounted for. That is where the HUD-1 comes in.
Also referred to as a settlement statement or closing statement, the HUD-1 is a three page form containing all of the numbers for a real estate transaction. The first two pages each have a buyers side and a sellers side, where their respective figures are inserted. The third page contains certain disclosures regarding the purchaser’s mortgage loan.
The HUD-1 settlement statement today is typically prepared through the use of a computer program, which will perform the addition and subtraction of various closing figures, resulting in the bottom line of the amount of money that the buyer needs to bring to closing, and the amount of money that the seller receives at the closing. The program will also compute real estate tax and sewer adjustments, and will calculate the realty transfer fee. A competent real estate attorney will double check the HUD-1 numbers manually to ensure that everything proves out.
In transactions involving a mortgage loan, the lender will supply its list of charges to be included on the HUD-1, and will require the HUD-1 to be submitted for approval before it will fund the loan. At the closing, the buyer and seller review and sign the HUD-1. It is also signed by the closing agent, typically either an attorney or title agent. Each party will want to provide a copy of the HUD-1 to his or her accountant to assist in preparation of their income tax returns.
Mr. Whelan is available by telephone or e mail to answer your real estate law questions.