On February 4, 2022, the Virginia Bureau of Insurance issued an administrative letter citing that the Real Estate Settlements Act, § 55.1-900 et seq. of the Code of Virginia (“Code”), and Real Estate Settlement Agents Act, § 55.1-1000 et seq. of the Code contemplate only one designated settlement agent performing the required activities and tasks for any particular real estate transaction. Therefore, split settlements are a violation of Virginia law.
Today, we would like to share an overview of the importance of this letter. Mike McFarlane, Founder, President and Chief Counsel of Highland Title + Escrow, recently shared his overview regarding the details of this letter in an edition of our monthly newsletter, Title Talk, as well as the importance of remaining compliant with this development.
Just a quick review – a Split Settlement is when the Seller chooses a second Settlement Company other than the Settlement Agent designated in the Sales Contract by the Buyer to represent the Seller. This allowed some flexibility for both parties when it was time for the settlement to take place.
While Highland Title + Escrow consistently serves the entire DMV community, this letter only affects Virginia. This ruling means that there is only one Settlement Agent, and that Agent should be designated in the Sales Contract. The Settlement Agent has a Fiduciary Duty (responsibility to act in the best interests of another person or entity) to BOTH the Buyer and Seller.
What does this mean for a Buyer? The Buyer has the right to choose the Settlement Agent.
A Seller may recommend a Settlement Agent, but they cannot require or force the Buyer to choose the one they would like to work with.
However, a Seller may choose to retain a lawyer for representation at Settlement, but why? Check out these reasons:
- The Seller isn’t comfortable with the Settlement Agent selected by Buyer.
- The closing location is not convenient for the Seller.
- A Seller may want some extra protection for peace of mind…especially if they have had a previous experience that was difficult.
Even though split settlements are a thing of the past, Highland Title & Escrow is here to stay. We have been in business for over 20 years, maintain a great reputation, and offer next day disbursements. Our Settlement Fees are available here. Highland Title + Title takes initiative to ensure your deals close smoothly, and your clients are happy. Contact us today at (703) 723-3300 to order your next title.