A common question in a Real Estate transaction is what are Settlement Agents and who can act as one. A Settlement Agent is a person who is not a party to the transaction, and provides escrow, closing or settlement services related to real estate in the Commonwealth of Virginia. A Settlement Agent can be a Title Insurance Company, Title Insurance Agent, a Financial Institution, Real Estate Broker or an Attorney. A Settlement Agent is required to be insured for Errors and Omissions, have both a fidelity and surety bond, audited annually, be a Title Insurance Agent, CRESPA approved, registered with the State Bar and retain all records for at least five years from the date of the transaction.

As an act of CRESPA, or the Consumer Real Estate Settlement Procedure Act, VA code § 6.1-2.19 et seq., Settlement Agents are authorized to perform the following:

Clear title to property

Enforce Lender's closing instructions

Insure that all documents are executed properly

Recommend title insurance options

Issue Owner's and Lender's Title Insurance Policies

Follow Purchase Contract provisions

Prepare HUD-1 settlement statements

Disburse funds in accordance with the provided Lender's instructions

Provide customer with a sufficient legal advisor, if needed.

There is a very fine line separating a Settlement Agent from an Attorney. If a Settlement Agent is not a licensed attorney, then they are NOT authorized to provide "Legal Advise." They can explain any and all things that are related to the settlement, such as, title requirements, liens, disbursements and taxes. They do not prepare legal documents, such as, Deeds, Deeds of Trust and Notes. If a Settlement Agent is not an Attorney, then they will have legal counsel who provides any and all legal services for their customers.

When it comes to a closing, the Settlement Agent acts under the Lender's Instructions for their benefit. All Settlement Agents want to provide the best possible customer service, however it can not be at the expense of the lender. By law, a Settlement Agent is required to report any activity they feel will interfere or conflict with the lender's interest in the transaction. Settlement Agents are bound by Lender Instructions, Attorney Instructions, the Title Insurance binder and any borrower preferences.

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