Now that we have all been using the new 2010 HUD for the past few months and are trying to get more comfortable with it, I thought I’d post this FAQ sheet to answer some more questions.
This FAQ is designed to make it easier to read the 2010 HUD for transactions in the State of Washington.
Why does the seller have to pay the excise tax in the State of Washington?
The excise tax is the seller’s obligation per RCW 82.45.080. Here is the law as stated in the RCW:
“Tax is Seller’s Obligation-Choice of Remedies.
The tax levied under this chapter shall be the obligation of the seller and the Department of Revenue may, at the department’s option, enforce the obligation through an action of debt against the seller or the department may proceed in the manner prescribed for the foreclosure of mortgages and resort to one course of enforcement shall not be an election not to pursue the other.”
Excise Tax is shown on line 1203 of the HUD. This is a seller charge. However, some lender’s require escrow to show it as a charge to the buyer (as it relates back to GFE#8), and a credit back to the buyer and charge to the seller on page one. The seller is still paying the excise tax.
Why is the total commission not shown on page two (2) in the 700 section?
If the closing agent is not holding the earnest money, the commission will be shown as follows:
The earnest money deposited by the buyer will still show as a credit on line 201 (page one). The commission paid at closing will be shown on page two on line 701 and line 702. The earnest money held by the selling agent will also be shown on line(s) (506-509) as a charge to the seller. The total of 701 and 702 and any commission in the 500 section represent the total commission paid at closing.
If the closing agent is holding the commission the earnest money will be shown as a credit on line 201 and the entire commission will be shown on line 701 and 702. This information is taken directly from the HUD regulations page #68244.
Why is the Owner’s Policy of Title Insurance shown as a charge to buyer on page 2 and then a credit back to the buyer and charge to the seller on page 1?
The NWMLS Purchase and Sale Agreement Section E under title insurance says the following: “Seller authorizes buyer’s lender or closing agent at seller’s expense to apply for the then current ALTA form of Homeowner’s Policy of title insurance…”.
The owner’s policy of title insurance is a seller charge. Lenders instruct escrow to show the owners policy as a charge to the buyer and then a credit back to the buyer on page one and a charge to the seller on page one. The owner’s policy is still a seller paid charge. The lender instructs escrow to reflect the charge this way.
If you have any questions please don’t hesitate to contact your escrow team or one of our sales representatives.
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