One of the least understood issues for the purchaser, seller or owner of a house is should I use an attorney or title company for my purchase, sale or refinance? Most real estate companies in Northern Virginia have a financial connection to a title company and suggest, cajole or require their agents to refer their clients to a specific title company for the simple fact that the company makes an additional fee from the settlement on your property. The following is designed to give you a factual background for your decision.
FEES: Although most people believe that a title company is less expensive than an attorney, my firm and most other attorneys with real estate based practices are actually less expensive then the title company where your real estate agent will attempt to steer you. This is especially true for a seller as the title companies generally overcharge the seller who usually accepts the title company picked by the Purchaser. As a Seller you can solve this problem by including a statement at the bottom of the "Virginia Jurisdictional Addendum" that the seller will select a settlement agent to represent seller. Then have your agent find out the fees and if the title company wants more then the fees described in the my Fee Schedule have your agent request that the title company lower the fees and if refused simply hire my firm or another attorney to handle your part of the settlement. You should never pay a higher settlement fee then the purchaser and any real estate agent that allows that is not acting in your best interests.
SERVICES: By choosing a title company you are restricting your ability to obtain answers to your legal questions concerning the settlement. Employees of a title company, including an attorney employed by a title company, are precluded by law from giving you legal advice. How should you hold title? What is your legal obligation to your lender? What happens at foreclosure? What are restrictive covenants and which ones are enforceable? What is part of the real estate and what is not? What does the survey mean and what encroachments meaningful? Will transferring your property to a trust leave you with no title insurance? What effect do restrictive covenants have on additions and improvements to real property? These and thousands of other questions are asked of me before, at and after settlement. I know the answers to these questions based on my 34 years of legal and real estate experience. Do you really think a clerk at the title company is as knowledgeable as any practicing attorney. Any company can have a nice office, act pleasant and make you think the know what they are doing.
TITLE EXAMINATIONS: It is impossible to explain the how many varied and complex issues may arise in a normal title examination. It seems easy to trace the ownership of a property from Smith to Jones to Davis to White. What you don't realize is that Smith can die leaving title to heirs at law or beneficiaries under a will; Jones could go bankrupt and the title could pass to a Trustee and be controlled by the intricate provisions of the bankruptcy act; Davis could be involved in a lawsuit with business partners that may or may not affect his title; and White could have federal tax liens placed against him and have the property foreclosed leaving an issue as to whether it was properly done.
Most title companies buy their titles and you have no idea whether your title was done by the best examiner employed by that company or one on his or her first day on the job. All of our titles are abstracted by our own examiner with 15 years of experience and his abstract is reviewed by an examiner who has spent over 20 years at his craft. We find errors in about 40% of the titles we examine. Most of these errors are correctable but a few are not like the $2,000,000.00 lien we found recorded three days before the buyer's deed was recorded. The value of that property is now zero. Settlement agents who prepare deeds improperly; record deeds and releases in the wrong jurisdictions; miss liens; and fail to release paid off trusts are not uncommon. The problem is that you will not know about these problems until you attempt to sell or refinance your property.
OTHER LEGAL MATTERS: At some point you may need a will, you may need a trial attorney, a divorce attorney, a bankruptcy attorney or a personal injury attorney. By having an attorney handle your settlement you will know one attorney who, if he does not handle the type of legal matter that you have, at least can use his or her years of experience to refer you to one or more attorneys who are not only the best in their field but charge reasonable prices for their services and give you proper representation.