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NEW JERSEY LAWYER ETHICS: HUD-1 REAL ESTATE VIOLATIONS

NJ Attorney Ethics - HUD-1 Real Estate ViolationsHUD-1 Real Estate Violations

Our New Jersey law firm represents attorneys who have been charged with violations stemming from signing HUD-1 real estate settlement forms.  The HUD-1 Settlement Statement is a standard form used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate, and documents the sale transaction for both buyer and seller.  HUD refers to the Department of Housing and Urban Development.

Typically, an attorney representing a purchaser acts as the settlement agent at the closing – meaning that the attorney will collect and disburse all funds in connection with the real estate transaction.  The HUD-1 form requires the settlement agent’s signature based on the following certification:

The HUD-1 Settlement Statement which I have prepared is a true and accurate account of this transaction. I have caused or will cause the funds to be disbursed in accordance with this statement.

Attorneys acting as settlement agents in real estate transactions frequently run afoul of this certification for a variety of reasons.  The most common examples include:

  • Disbursing fees to third parties who are not identified on the HUD-1
  • Paying fees in different amounts than actually reflected on the HUD-1
  • Failing to disclose an agreement between the buyer and seller involving credits for closing costs or repair costs
  • Failing to prepare an amended HUD-1 form after the closing if the attorney becomes aware of an error
  • Overcharging for recording fees

In recent years the New Jersey Office of Attorney Ethics has adopted a very aggressive approach in pursuing attorneys for HUD-1 violations, essentially asserting that any deviation that renders the Certification inaccurate constitutes a violation of RPC 8.4(c) involving conduct of dishonesty, fraud, deceit or misrepresentation.  However, not every error on a HUD-1 statement automatically constitutes an RPC 8.4(c) violation especially if the inaccuracy was not material to the parties and no one was mislead by the inaccuracy.   In re Castiglia, 197 N.J. 465 (2009).  In a recent case we successfully defended an attorney charged with knowingly falsifying a HUD-1 statement.  Click here to read the article. 

Partner Glenn R. Reiser has successfully defended New Jersey attorneys in ethics proceedings involving violations of RPC 8.4(c) stemming from real estate transactions and HUD-1 forms.  Mr. Reiser will evaluate your case and determine whether there are valid defenses to the RPC 8.4(c) charge, and will vigorously defend your rights at a hearing.

Contact our New Jersey professional ethics counsel to discuss your ethics grievance.

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