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Damien Bosco
Damien Bosco, Attorney
Category: Real Estate Law
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I am the seller, there was an addendum written by the buyers

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I am the seller, there was an addendum written by the buyers agent to the purchase contract stating that I would pay for 5k in upgrades to the property, it states that the payment will be made directly to the buyer's contractor of choice, and I signed the addendum. I received the HUD-1 statement today and the 5k is not listed. I am assuming that the buyer did not disclose this addendum to his lender. Am I legally bound by the addendum, if this was not disclosed to the lender. Would I be legally obligated to pay for these upgrades outside of closing ?
Hi and welcome! My name is XXXXX XXXXX I will be assisting you. I am happy to help.

If there is an error on the HUD-1 Statement, you do not have to complete the closing. No buyer or seller is obligated to complete a closing until all questions related to the HUD-1 have been answered satisfactorily.

Both the sellers and buyers are ultimately responsible for reviewing their HUD-1 statements for accuracy and for ensuring that any errors are corrected before the end of closing.

Therefore, if you as the seller received the HUD-1 statement to review, it is your responsibility (as well as the buyer's) to make sure it is accurate. If it is not accurate, you do not have to close. So, If the buyer does not want to change the HUD statement, you do not have to go through with the closing. I hope this response answer your question. If not, let me know. Best regards, Damien
Customer: replied 4 years ago.
Thank you for your response, but my question pertains to the legal enforcement of the addendum that i signed. According to the buyer, and the title company the HUD-1 is correct. This is great news for me, because it omits the addendum coverying the 5k in upgrades. That being said, if we close using this HUD-1, am I legally obligated to pay the buyers contractor after closing? I don't believe that i would be. Also, i'm pretty sure it would be illegal for me to pay for services outside of closing that the buyer did not disclose. After reading section 8 of RESPA which states "prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of a settlement service business involving a federally related mortgage loan" it goes on to say "prohibits receiving unearned fees for services not actually performed". Furthermore, violations of this section are subject to criminal and civil penalties. I am going to hire a local attorney to review this for me, but I would like a second opinion. So, you are my second opinion on wether or not the addendum is legally binding once the buyer and myself sign the settlement statement ? Thank you for your time. Best Regards XXXXX XXXXX

Hi Matt: We cannot give legal opinions from this website. As you know, there is no attorney client relationship nor attorney client privilege. In any event, there is overlapping law: contract law and tort law. In other words, when signing a contract, one must abide by it. That is contract law. Falsely reporting to HUD would fall under tort law (if a civil claim) and possibly criminal law (if the alleged fraud rises to that level.) You relate that the buyer and the title company state that the HUD statement is completed correctly. You appear to disagree. Therefore, taking the chance to close when you believe that the HUD statement is not filed correctly and it is partly your responsibility to correct it, then attempting to get out of the addendum, is something that appears to be a risky position for you to take. Separately, you lead yourself open to a claim against yourself for allegedly inducing the buyer to sign a sales contract by promising in the addendum to pay for repairs at a later date; and then using the HUD statement, which you are partly responsible to file correctly, as a pretext to breaching the contract (this would be the argument made against your actions). Speak with your attorney to make sure you know what you can and cannot do and the risks involved with each position you take. I hope this helps you understand the issue better. Best regards, Damien

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