The HUD-1 Settlement Statement and How it Affects Your Future Home Purchase

There has been an important change made to the HUD-1 Settlement Statement, a form used during home closings to itemize all ingoing and outgoing funds. The Real Estate Settlement Procedures Act, also known as RESPA, requires that the HUD-1 Settlement Statement be properly filled out in each and every closing transaction involving a federally regulated mortgage loan.


Instead of the HUD-1 Settlement Statement, a new form called the Closing Disclosure Form should be used. The Consumer Financial Protection Bureau designed the new form so that home buyers can clearly identify their amount of their loan and the interest rate that will be due on it, as well as a projection of their monthly payments.



Additionally, buyers must be given the Closing Disclosure Form an additional three (3) days before the closing in order to give them ample time to consider the commitment of the mortgage loan.

It is important for all home buyers to review and carefully consider the paperwork involved at closing. A real estate attorney can help guide you through the process and answer any questions or concerns you may have.

Get the Right Lease When Leasing Commercial Real Estate

The process of purchasing commercial real estate, especially for the first time, can be overwhelming. The first step is finding the ideal property, one that suits both your business needs and your financial resources. The next step is drawing up the right lease. When purchasing commercial real estate, as with any other major financial transaction, I strongly recommend you retain the assistance of an experienced attorney.

The details of your lease agreement will be very important for your financial future. These details can save or cost your business thousands of dollars annually, so it is vital for you to look over every section of your lease agreement with care. Below, I am listing some items you and your attorney should consider before you sign your new lease. 

- What space are you renting?

The lease should clearly define the parameters of the space you will be leasing, including a site plan. A lease that is not clear in delineating what your property can lead to future costly Landlord/Tenant disputes. A common issue of contention is common areas and their maintenance. Most leases will hold Tenants responsible for at least some of the cost of maintenance of common areas, make sure 

- What is your rental rate and how is it calculated each year?

Your lease should state not only your rental rate, but how much it will increase each year, whether that is determined by a formula or simply a flat rate. 

- Do you have an "Exclusive Use" clause?

In commercial real estate, renters are commonly given an "Exclusive" if their property is located in a shopping mall or other commercial area. An "Exclusive Use" clause gives you the right to be the only business of your particular type in the commercial area owned by your landlord. An "Exclusive" can ensure your new business wont deal with direct competition and save you money in the process, so make sure you consult your attorney if these rights are not mentioned in the initial draft of your lease. 

- Does the lease include a "Personal Guarantee"?

A "Personal Guarantee" is a clause in your lease that holds you, as the renter, personally liable for the rent if the business is not able to pay it. Personal Guarantee clauses have become increasingly common in the past few years, but this does not mean you have to outright accept them. If signing a Personal Guarantee makes you uncomfortable, you can ask your attorney to revise it to cover only a set amount of time, for example the first two years of the lease.

- Does the lease permit subleasing?

A lease that permits the renter to sublease the space can be a big advantage to renters, especially if you signed a Personal Guarantee. Subleasing rights allow the renter to lease out the property and cover rent costs if difficulties arise. 

You and your attorney should consult on each of the above topics before you sign your new lease agreement. Good luck! 

Purchasing a Home? Here's a Few Tips

Purchasing a home, especially for the first time, is an important financial decision. Choosing a fix-up property can oblige you to extensive renovations and/or costly repairs while

1. Evaluate your finances.
It's standard to review your finances so you have some idea of the budget you'll be working with as you search for a house. However, it's also important to communicate with your lender and get a letter of pre-approval before you begin your search. Don't make the mistake of falling in love with a home without being able to make a serious offer on it. Get your paperwork in order first, so you'll have clear expectations about what you need and what can you offer.

2. Don't make an offer on a "fixer-upper" without thinking of the financial implications.
Renovating a home can be a fun and worthwhile project, but don't forget to calculate the cost of repairs, renovations, and time spent first. You can get a great deal on a home and end up using up those savings in repairs you didn't anticipate. Pay close attention to the home inspection and get estimates on any repairs you plan on doing.

3. When you calculate your budget for a home, make sure to consider the additional expenses homeowners have.
If you fall in love with a home priced at the top of the budget, make sure you consider the additional expenses of homeownership such as property taxes, fees from a homeowner's associations, and normal upkeep and maintenance of a home. If these calculated expenses put you over budget, consider other options. New homeowners will sleep easier at night knowing they have a solid financial buffer.

4. Use a real estate agent and an attorney you trust.
It's important that you have experienced people to help guide you through this process. A good real estate agent is invaluable when investing in a home. Your agent should be experienced with selling homes in the area you're looking to purchase in and easily available over phone.

How to Hire a Real Estate Attorney

Buying or selling a house is decision that can seriously impact your financial future. When making important financial decisions such as this, I always recommend that you consult a legal professional. Some potential homeowners try to go through the process with only a real estate agent, but while a real estate agent is familiar with the process of selling and buying homes, they are not knowledgeable about real estate law. They will not be able to advise you on the legal implications of the contract you sign during the closing process. Only a real estate attorney can provide you with proper legal advice.