Opinion ID: 1395295
Heading Depth: 2
Heading Rank: 2

Heading: Incorporation of the HUD Reports

Text: Lot owners Lawson and Douglas maintain that the HUD Reports they received from HKI at the time they purchased their lots were part of their sales contracts with HKI. The lot owners contend that, even if the SLSA did not apply to the subdivision, provisions contained in the HUD Reports required HKI to transfer the common facilities to the Association when the 75 percent threshold sales level was reached. [7] We conclude that the trial court did not err in holding that the HUD Reports were incorporated into the Lawson and Douglas contracts. In Marriott v. Harris, 235 Va. 199, 214-15, 368 S.E.2d 225, 232-33 (1988), we held that a HUD property report was incorporated into a contract for sale by language in the contract referring to the report, although specific words of incorporation were not used. [8] Furthermore, incorporation was not defeated by a clause in the contract stating that the contract represented the entire agreement between the parties because, if the report is deemed incorporated into a contract, then the report is part of the entire contract protected by just such a clause. Id. at 214 n. 6, 368 S.E.2d at 232 n. 6. Marriott is dispositive here. The contracts HKI executed with Douglas and Lawson contained the following language referring to the HUD Reports: YOU HAVE THE OPTION TO VOID YOUR CONTRACT OR AGREEMENT BY NOTICE TO THE SELLER IF YOU DID NOT RECEIVE A PROPERTY REPORT PREPARED PURSUANT TO THE RULES AND REGULATIONS OF THE OFFICE OF INTERSTATE LAND SALES REGISTRATION ... IN ADVANCE OF, OR AT THE TIME OF YOUR SIGNING THE CONTRACT OR AGREEMENT. IF YOU RECEIVED THE PROPERTY REPORT LESS THAN 48 HOURS PRIOR TO SIGNING THE CONTRACT OR AGREEMENT YOU HAVE THE RIGHT TO REVOKE... BY NOTICE TO THE SELLER UNTIL MIDNIGHT ON THE THIRD BUSINESS DAY FOLLOWING THE CONSUMMATION OF THE TRANSACTION. There is no substantive difference between the language referring to the HUD Reports in this case and the language considered sufficient in Marriott to incorporate the report into the contract for sale. In this case, the representations made in the HUD Reports were incorporated into the contracts of sale, were part of the bargained-for exchange, and were collateral terms of the sale not inconsistent with the deeds. See Carstensen v. Chrisland Corp., 247 Va. 433, 440, 442 S.E.2d 660, 664 (1994); Miller v. Reynolds, 216 Va. 852, 855, 223 S.E.2d 883, 885 (1976). [9] The trial court, therefore, correctly held that HKI has a contractual obligation to comply with the provisions contained in the HUD Reports. [10]