Updated: Jan 13, 2020
Congratulations again on finding the home of your dreams! You have gotten the home under contract, you have scheduled your inspections and you have also made formal loan application! But you also need to decide on who it is that you want to handle your side of the closing! In Virginia, you will choose your settlement agent and the seller will choose their settlement agent - in all likelihood, you will probably never meet the seller! The seller will meet with their settlement agent sometime before your closing day - they will sign the deed and a few other pieces of paperwork, and then that will be couriered to your settlement agent so that you will be able to close on your scheduled closing date!
One of the questions I am often asked is: Do I really need to get an attorney to do the settlement?
In Virginia, non-attorneys can do settlements. There are several title companies locally that will do real estate closings for you, and they may even be a little bit less expensive than using an attorney to do your side of the closing. But non-attorneys such as title companies, while they can perform closings, they cannot practice law! When I am working with buyers, even buyers who are very tight on their cash and want to try to save every dollar they can wherever they can - I always recommend that they use an attorney to do their side of the closing! Why? If anything ever happens between the time your offer was accepted and the day of closing that could impact your transaction negatively, it is nice to know that you can get some legal advice on how to resolve whatever the situation is. A non-attorney can only offer limited services - but they can't interpret the documents or your contract and in many cases, they may only witness your signature at closing!
So just what does the settlement agent do? It is more than just pushing papers.
· The settlement agent will receive the contract and sometimes will also hold your earnest money deposit in their escrow account!
· They will collect information on buyers, sellers, Realtors involved in the transaction, the current loans on the property & who will be providing the new mortgage!
· They will order a title search and help to resolve any title issues that may be on the title - for example, a previous mortgage that was paid off but somehow never got released from the title, or a judgment that got put onto a title because the owners name was similar to that on the judgment (but the judgment really belongs to someone else)!
· They will make sure that the title is insurable so that title insurance can be put onto the property (this is a one time fee that you will be paying at closing to insure the title - here is a good article on what title insurance is!
· They will get the final payoff from the owner's current mortgage holders - to make sure that their loan is paid off!
· They will contact the homeowner's association (if there is one) to find out what the dues are, and if the seller owes anything that needs to be collected at closing!
· They will double check the contract and any addendums to make sure that the credits and adjustments are properly made on the settlement statement!
· They will make sure that the termite report, the home warranty and any other repair invoices are received. They want to make sure that the termite report received is a clean termite report (or if not, that the repairs and/or treatment) has been done and the lender is satisfied. They want to make sure to pay for the home warranty so that it will become effective on the day of closing. And they want to make sure that all repair invoices per the contract & addendums are either marked as paid, or will be paid from the sellers proceeds at closing!
· They will make sure that all funds - from both the buyer and the lender - are received prior to closing to avoid a "dry settlement" (against Virginia law)!
· They will have a last title check done at the courthouse after the buyer has signed the paperwork, to ensure that no intervening liens have been put on the title since the previous title check!
· They will then record the deed and other paperwork at the courthouse to ensure that the title will accurately reflect ownership chain of title!
· They will then disburse all funds due to everyone - proceeds to the seller, paying all bills, disbursing the real estate commissions, paying off the mortgage, etc!
This is everything that can be done by either an attorney or non-attorney settlement agent!
But if you choose a non-attorney firm to do your closing, here are some of the things they CANNOT do:
· They cannot draft any deeds or any other legal documents!
· They cannot explain your rights & obligations pursuant to the contract & other legal documents!
· They cannot explain to you the meaning of the loan documents you are signing at closing!
· They cannot explain the impact of any title defects or title policy exceptions!
· They cannot offer answers to or opinions on some questions that may arise during the closing!
Buying a house can be stressful, and even though in Virginia you have the right to have a non-lawyer do your closing, I normally will recommend using an attorney.
Thinking of buying a house and have questions? Feel free to contact me at 804-869-1191 and let me know