The Real Estate Settlement Process
The “settlement” or “closing” is typically understood as the signing ceremony – where the buyer signs all of the documents required to purchase real estate and accepts the deed of bargain and sale from the seller. There are, however, many things that happen from the time of the contract signing up until the actual settlement.
When you hire RVA Real Estate Settlements, one of the first things we do is carefully review you purchase contract. Working with you, any real estate agents, your lender, the seller’s attorney, and other service providers, our first priority is to make sure that the transaction follows the terms of your contract. Next, and typically after the satisfaction of any significant contract contingencies (e.g., a home inspection contingency), we provide the following services:
- Order a title search of the property
- Review the title search results
- Prepare a title insurance binder (commitment) that sets forth the terms of the proposed insurance coverage based upon the search results and any lender requirements
- Provide preliminary draft documents to your lender and the seller’s attorney
While we are doing those things, we are communicating with the real estate agents, the termite/pest inspection company, the lender, and other providers to make sure required tasks are being conducted. If there are concerns or clear problems with the title, we work with the seller’s attorney to address those matters.
At settlement or closing, we will have in our possession the deed of bargain and sale from the seller along with several other documents from the seller. We also collect at closing monies from you and your lender. (For all but relatively small amounts of funds, we require all funds to be wired to us).
Once we have everything in place to meet the terms of your purchase contract and to satisfy all requirements of your lender and the title insurance requirements, we can “close” the transaction. After closing, we will promptly record the deed of bargain and sale and the deed of trust at the courthouse in the city or county where the property is. After recording, we will disburse funds to all the companies and persons who are owed money. Virginia law allows us two business days to disburse funds, however, we generally disburse on the day of recording or the next business day.
After closing, recordation, and disbursement, we still have a few more tasks to perform as part of our services to you. As the settlement agent, federal tax law requires us to report the transaction to the IRS, in certain cases we must also report the transaction to the Virginia Department of Taxation, and we also track to make sure the deeds of trust of any loans that we paid off at closing are released at the courthouse.
Security and Technology
It hardly seems we can go a week or two without hearing or reading about another significant data breach and/or loss suffered by large companies that have dedicated substantial resources to protecting their computer systems. In the real estate settlement context, fraud in connection with the wiring of funds is a problems that has risen significantly in the past several years.
RVA Real Estate Settlements uses proven technology to improve our services and our customer’s experience. We embrace technology and established best practices that will improve the security and financial integrity of the transaction. Starting in 2019 we began using Qualia as our closing/settlement platform. We securely store post-closing records on NetDocuments.
Compromised email systems are often the genesis of many financial fraudulent activities. We will never accept outbound wiring instructions via email. And in general we are very conscious of the vulnerability of all email communications. The use of email is necessary, however, please never use unencrypted email to send us confidential or sensitive information.
Another anti-fraud procedure we have adopted is the use of “Positive Pay” through our bank, South State Bank.
Real estate transactions are still paper intensive transactions, but electronic filing is slowly making its way into the Virginia real estate transaction. A challenge in Virginia is that each Circuit Court Clerk’s Office (where land records are maintained) operates independently. We use CSC e-recording and Simplifile. And where we can safely do so, we will record electronically if the Clerk’s Office offers e-recording. E-recording is a time saver, but until the Clerk’s recording systems are improved, there exists title insurance company risk that our agency and title insurance companies, like our insurer, Old Republic, need to continually monitor and evaluate.