Section § 55-525.22, Code of Virginia (1950), as amended, states that a purchaser or borrower in a transaction related to real estate in the Commonwealth shall have the right to select the settlement agent to provide escrow, closing, or settlement services in connection with the transaction. The seller in such a transaction may not require the use of a particular settlement agent as a condition of the sale of the property.

While your real estate agent or lender may wish to refer you to someone who is affiliated with their real estate brokerage or lender (lenders and brokers can perform settlements), their prices are often higher and the brokerage or lender may be profiting as a result of the referral. Ask whether the lender or broker owns a portion of the company to which you are being referred. It is recommended that you choose your settlement agent yourself.  Veterans Title is not affiliated with any lender, broker, or real estate agency.



A Settlement Agent is a person or entity, other than a “party to the real estate transaction,” who provides “escrow, closing or settlement services” in Virginia in connection with a transaction involving real estate containing not more than four residential units.

Only the following persons can legally provide “escrow, closing or settlement services” for such transactions in Virginia:

          a. An attorney who is licensed by the Virginia Supreme Court and is an active member in good standing of the Virginia State Bar;

          b. A title insurance company or title insurance agent (which may be a business entity) licensed by the State Corporation Commission (Veterans Title is licensed by the State Corporation Commission, Bureau of Insurance as a title insurance agent for First American Title Insurance Company);

          c. A real estate broker licensed by the Virginia Real Estate Board;

          d. A financial institution (or a subsidiary or affiliate thereof) authorized to do business in Virginia under Title 6.2 of the Code of Virginia, or under federal law, including state and national banks, state and federal savings institutions, trust companies, credit unions, state consumer finance companies and state industrial loan associations;

          e. A party to the real estate transaction (i.e., buyer, seller, lender or borrower).

No other person can lawfully act as a Settlement Agent or provide such “escrow, closing or settlement services.”



Every settlement agent shall be registered as such with the appropriate licensing authority. In conjunction therewith, settlement agents shall furnish (i) their names, business addresses, and telephone numbers and (ii) such other information as may be required. Each such registration (a) shall be accompanied by a nonrefundable fee not to exceed $100, and (b) shall be renewed at least biennially thereafter. No party to a real estate transaction may contract with a person not authorized to act as a Settlement Agent to provide “escrow, closing or settlement services.” (Veterans Title is registered with the State of Virginia to provide settlement services). As a matter of public policy, a party to a covered real estate transaction is better protected by selecting only a Settlement Agent authorized to provide “escrow, closing or settlement services.”  Guidelines have been established for settlement agents with the required knowledge and skills to handle such transactions and the requirements of examination, licensure, insurance, continuing education and fiduciary responsibility deemed necessary to provide “escrow, closing or settlement services” in a diligent and competent manner. Unauthorized Settlement Agents are not subject to consumer protection standards, including a standard of care, fiduciary obligations and audit requirements.


To protect a consumer, Virginia requires an authorized Settlement Agent (other than a financial institution or title insurance underwriter) to maintain:

          (i) an errors and omissions policy or malpractice insurance policy with a minimum of $250,000 coverage per claim (Veterans Title has a $1,000,000.00 coverage per claim policy);

          (ii) a blanket fidelity bond or employee dishonesty policy with a minimum of $100,000 coverage (unless the Settlement Agent satisfies the Act’s waiver requirements); and

          (iii) a surety bond of not less than $200,000.


In other words, if your Settlement Agent is an attorney, title agent or real estate broker, they must demonstrate to the satisfaction of their appropriate licensing authority that they have met these financial responsibility requirements.

All funds deposited with a Settlement Agent in connection with a closing must be handled in a fiduciary capacity and must be deposited by the second business day in a separate trust or escrow account and disbursed in accordance with the written instructions under which the funds were accepted.

A Settlement Agent (other than an attorney) must undergo an annual audit of its escrow accounts and file a report.



In closing your transaction, the Settlement Agent coordinates numerous administrative and clerical functions relating to the collection of documents and the collection and disbursement of funds required to carry out the terms of the contract between the parties. If a lender is involved in the transaction, the lender will instruct the Settlement Agent as to the signing and recording of lender documents and the disbursement of loan proceeds. A Settlement Agent must follow the written instructions of the lender with regard to the disbursement of funds.

“Escrow, closing or settlement services” occur after the buyer and seller have executed a contract for the sale of real estate, or after a lender has agreed to refinance or provide a borrower a loan secured by real estate. “Escrow, closing or settlement services” are those administrative and clerical services required to carry out the terms of contracts affecting real estate. In connection with a real estate closing, the following tasks, among others, may be performed:

          1. ordering survey, termite or other inspection(s), casualty insurance or certificates of insurance, lien payoff figures, loan checks or title insurance, and deed, power of attorney, or subordination agreement;

          2. obtaining, creating, or preparing a title abstract (the title agent will then review these documents to determine whether there are any defects of title which must be resolved);

          3. determining the status of utility services and assisting in their transfer;

          4. making mathematical calculations involving the proration of taxes, insurance, rent, interest and the like in accordance with the contract or local custom;

          5. completing form documents selected by and in accordance with the instructions of the parties to the transaction;

          6. obtaining lien waivers from mechanics or materialmen in a form acceptable to the parties in interest, but not drafting such waivers or giving advice as to the legal sufficiency thereof;

          7. following up with the parties to ensure that the transaction progresses to closing;

          8. setting the closing appointment;

          9. reviewing closing documents to determine that information is correct and that all closing documents conform to the parties’ contract requirements;

          10. preparing settlement statements, such as the Closing Disclosure or Settlement Statement;

          11. drafting receipts and certificates of satisfaction;

          12. completing other forms such as the Owner’s/Seller’s Affidavit, Notice of Availability of Owner’s Title Insurance, and tax reporting forms including FIRPTA, 1099, VA R-5, and VA R-5E and reporting federal income tax information for the real estate sale to the Internal Revenue Service and Department of Tax Administration for the Commonwealth of Virginia.

          13. conducting a closing conference at which the documents are executed;

          14. receiving settlement funds;

          15. conduct a post-closing examination to ascertain that the lender’s instructions have been satisfied;

          16. handling or arranging for the recordation of documents;

          17. disbursing settlement funds;

          18. sending recorded documents to the lender;

          19. sending the recorded deed and the title policy to the buyer;

You have the right to select your own Settlement Agent to handle the closing of your transaction. The Settlement Agent need not be an attorney, but must be a person authorized to serve as a Settlement Agent, even if he or she is an attorney.