ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 5, 1996 TAG: 9612050028
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: RICHMOND
SOURCE: ASSOCIATED PRESS
A coalition of title companies, bankers and real estate interests proposed legislation Wednesday that would regulate both lawyers and non-lawyers conducting residential real estate closings.
The Coalition for Choice in Real Estate Closings proposed the bill after the Virginia State Bar recommended a measure that would require all real-estate transactions be conducted by lawyers.
The state Supreme Court must now consider the lawyers' proposal. If the court approves the measure, it becomes binding statewide.
The coalition contends the lawyers are motivated only by greed and that many settlement and title companies would go out of business if the lawyers get their way.
``We're trying to avoid a situation where the General Assembly hasn't done anything and the Virginia Supreme Court acts'' on the measure, coalition spokesman Brian Ball said.
The group also wants the legislature to approve a bill to keep title and settlement companies in business while the issue is being decided.
The Virginia Real Estate Attorneys League contends that only lawyers should do closings because they are legally obligated to protect their clients' interests, while title companies look out for their own financial interests.
``The Consumer Real Estate Settlement Protection Act regulates lawyers and non-lawyers doing closings'' to provide the ultimate consumer protection, Ball said.
Among other things, the proposal would require:
All settlement funds to be deposited in escrow accounts at financial institutions authorized to do business in Virginia;
All settlement agents to carry ``malpractice'' insurance to cover errors and omissions and be bonded to cover dishonesty by their employees;
Non-lawyers to disclose up front that they cannot provide legal advice to the parties to a settlement.
The subcommittee voted to continue studying the issue of real estate closings, including looking at the coalition's proposed bill, but it declined to endorse it. The panel also voted against recommending a proposed bill by state Sen. Richard Saslaw, D-Fairfax County, that would block the Supreme Court from changing the law on real estate closings.
Saslaw called efforts to limit real estate closings to lawyers ``the worst thing I've seen in 20 years'' as a state legislator.
The decisions came after a lengthy public hearing in which a handful of people on both sides of the issue told the committee about lawyers or title companies botching their closings.
The subcommittee also heard from Virginia Association of Realtors attorney John G. Dicks, who said the issue is a matter of consumer choice.
``If you need an attorney, go get one,'' he said. ``If anyone in any real estate office has a question about a contract, consult an attorney.''
But Northern Virginia real estate lawyer Howard A. Birmiel contended that real estate companies steer consumers toward chosen lenders and title companies, and those recommendations are skewed by referral fees.
Such controlled business discourages consumer choice, Birmiel said.
LENGTH: Medium: 67 linesby CNB