Do you need a real estate attorney to close in Virginia?

What the law requires

Chapter 10 of Title 55.1 governs “settlement agents” (§ 55.1-1000 et seq.). It covers purchases of, and loans secured by, property with up to four dwelling units. A person may not act as settlement agent, and no lender, seller, buyer or borrower may hire one, unless the person has no felony conviction (barring restored rights) and is one of these (§ 55.1-1003):

1. A Virginia-licensed attorney
2. A licensed title insurance company
3. A licensed title insurance agent appointed by a Virginia-licensed title insurer
4. A licensed real estate broker
5. A financial institution authorized to do business in Virginia
6. A subsidiary or affiliate of such a financial institution

The same chapter lets a “lay” settlement agent, meaning a person who is not an attorney, handle closings if registered (§ 55.1-1002). Every settlement agent must register with its licensing authority, which is the State Corporation Commission, the Virginia State Bar or the Real Estate Board, depending on the type, and renew at least every two years (§ 55.1-1014).

A real estate licensee who is not named as the settlement agent on the closing disclosure may still handle closing paperwork for a deal the licensee is part of (§ 55.1-1001).

Who conducts closings in practice

The statute does not say how often each type is used. What it does say:

• The buyer chooses. A purchaser or borrower has the right to pick the settlement agent, and the seller may not require a particular one (§ 55.1-1006). Every Virginia purchase contract for up to four units must carry a 10-point boldface “Choice of Settlement Agent” notice that says so (§ 55.1-1007).
• What the agent does. The role is administrative and clerical: ordering title insurance, collecting documents and funds, preparing the closing disclosure, recording documents and paying out the proceeds (§ 55.1-1000). The agent must record the deed and deed of trust and disburse proceeds within two business days of settlement (§ 55.1-903).
• Where the money sits. Funds go into a separate fiduciary trust account no later than the end of the second business day and may be paid out only under written instructions (§ 55.1-1008).
• Owner’s title insurance. The agent must tell the buyer that owner’s title insurance is available (§ 55.1-903). See title insurance explained.

Anyone who runs a closing without a license may face a civil penalty of up to $5,000 per violation, restitution, and a cease-and-desist order (§ 55.1-1015).

Typical attorney fee

No official source I read gives a typical Virginia attorney fee for a closing, and the statutes do not set one. Fees are set by each firm and appear on your closing disclosure under settlement or title services. Ask for a written quote and compare it on your lender’s Loan Estimate. For a line-by-line view of other costs, read closing costs explained.

When an attorney is worth it anyway

Virginia puts a hard line between settlement work and legal advice. The mandatory contract notice says no settlement agent may give legal advice to any party, except one in the private practice of law who has been hired by a party to give legal services to that party (§ 55.1-1007). So if you want someone to explain your rights, you need to hire your own lawyer. The Code lists these as proper tasks for a seller’s attorney: deed preparation, fee negotiation, document review and advice on settlement or closing matters (§ 55.1-1006).

A lawyer is often worth the fee when:

• The title search shows liens, easements or ownership questions
• The deal is a for-sale-by-owner sale or a sale from an estate, trust or divorce
• The contract has unusual terms
• You received the disclosure statement late and need to decide whether to cancel
• A foreclosure or a dispute is in the background

A represented seller gets an extra protection: the settlement agent may not collect any fee from that seller for itself or its affiliates without the written consent of the seller’s counsel (§ 55.1-1006).