What Does a Settlement Agent Do?

In a real estate transaction, one of the key players on the team that will get you to settlement (also called closing) is the Settlement Agent (SA).  The buyers have the right to pick their settlement agent--who does most of the work--but the seller can choose someone else to prepare their deed and deliver that to the SA.  The SA can be the representative of a title company or can be an attorney. 

The tasks that are done come in four blocks. 

First, the SA has a trained professional research the property title (the chain of sales from one person to the next, back 60 years, and any "encumbrances" on the title--unreleased liens, missing owners signing off on a sale, etc.).  (This is not a survey of the property for physical encumbrances, like a neighbor's easement to cross the property or a utility company's right of way to use part of the property.  I'll talk about surveys another time.)

The SA then contacts a title insurance company who will prepare an insurance policy saying that this current transfer of the property is free and clear. (This title insurance is always bought for the lender, and the owner can buy their own policy which protects their equity in the property above what the lender actually owns.)

Second step:  The Settlement Agent receives the loan package from the lender and gathers other information needed for closing (taxes to be collected, homeowners' insurance, homeowners' association fees, etc.).  All this is put together for the final closing statement, which shows charges and payments to buyer and seller.

The third task the SA does is to conduct the meeting that we usually call "the" settlement, and a key function there is to explain all of the items on the settlement statement to the buyers and sellers.

The fourth task that the settlement agent (SA) does is to record the deeds and the mortgages in the county courthouse, then disburse payments to the seller and insurance companies, tax collectors, etc.  That's the last step. 

It's important that these tasks be done well so that all the legal issues are properly taken care of, and so that the buyer and the seller are given all the information they need. (Your REALTOR®'s role in this is to help coordinate all these pieces of the puzzle and keep everyone on schedule, and to help resolve any problems.)

I recommend that my clients use an attorney as Settlement Agent, although the cost may be $50 higher (out of $400 to $500), because a Title Company representative cannot explain or advise on any issues that have legal implications (even the loan papers). 

It's very important to have someone who does the job well--who has thoroughly trained paralegal assistants who actually prepare all the paperwork--and who can explain the settlement statement clearly and thoroughly to the buyer (who may be doing this for the very first time, or come from a state where these matters are handled quite differently). 

I have had excellent and awful experiences lately with attorneys doing settlement.  Ask your REALTOR® for a recommendation, and reasons why she or he likes to work with certain people. 

Patricia J. Tracy, REALTOR®
Graduate, REALTOR® Institute (GRI)
Accredited Buyer Representative (ABR)
e-Pro Certification
Licensed in Virginia
www.pat-tracy.com
pattracy@cbtownside.com
540-230-1355

Coldwell Banker Townside, REALTORS®
www.cbtownside.com
blog@cbtownside.com