What’s all the hubbub about HUD

What is all the hubbub about HUD-1
Brokers and agents have one question that is asked more often than any other: the list of documents that must be retained in a file as required by the Department of State (DOS). My answer has been very consistent through the years: while it is not required, the HUD-1 Settlement Statement, which the seller and buyer receive at the closing or the contract of sale, will provide the broker with all the information required by DOS. Do any of you remember the Prego Spaghetti Sauce commercial that promoted the product because it contained all the right ingredients with the tagline, “It’s in there!” In the same vein, one could say that any and all information that could possibly be required by DOS is contained in the HUD-1 Settlement Statement or the contract of sale. While it is true that most agents have difficulty in obtaining these documents, there is no reason why the agent should not ask for a copy of both during the course of the transaction. You will never know if you can obtain the documents unless you ask for them. I never have a problem providing a copy of either of those documents to the agent so long as my client does not object. If the attorney for the buyer or seller is broker-friendly and the consent of the principal is obtained, there should be no reason why the agent cannot walk away from the closing with a copy of the HUD Statement and/or a copy of the contract of sale.
DOS recently modified Section 175.23 of the Rules and Regulations governing the practice of Real Estate brokerage law. All licensees were recently sent a copy of that email notification by DOS, but that has not stopped the flurry of questions about the interpretation of the statutory provision. It has always been the case that the broker of an office must maintain records for at least three years (although the statute of limitations for the collection of commissions or a claim for breach of fiduciary obligation is six years). Basically, the recent revision contemplates the difficulty of a brokerage firm in obtaining a HUD Statement or contract of sale since, in many jurisdictions in New York State, the real estate licensee does not prepare the contract. As a result, DOS will not require a firm to maintain a document that the firm does not or cannot obtain in the ordinary course of business. For purposes of expediency, I will highlight the recent revisions to the regulations:
1. Pertinent information includes the name and address of the parties to the contract, purchase price, amount of the deposit, commission to be paid to broker, agency disclosure, lead paint disclosure, and all other statutory required disclosure statements which must be provided by the licensee.
2. The brokerage firm can keep paper or electronic records
3. Involves the sale or mortgage of one to four-family homes or cooperative or condominium property intended to be used as a primary residence.
4. Does not involve vacant land.
5. In jurisdictions where the agent prepares contact of sale, a copy of the contract must be retained, but in other jurisdictions, the pertinent information is contained in an Offer to Purchase or Binder, Term Sheet, Contract of Sale, or HUD-1 Statement.