As we mentioned recently, Virginia recently passed a lot of new real estate legislation; one key provision of those changes re-affirms and strengthens Virginia buyers’ ability to choose their own settlement agent, even in short sale and foreclosure transactons.
Virginia’s Consumer Real Estate Settlement Procedures Act (CRESPA) mirrors in many ways the Federal RESPA regulations that provide important rights for consumers in real estate transactions. CRESPA has always given buyers the right to choose their own settlement agent, and most real estate lawyers we know in Virginia have been of the opinion that those rights could not be taken away from a buyer just because the seller insisted in either a listing or contract on the buyer using a different settlement agent; the revised version of CRESPA now makes that fact explicit:
Variation by agreement: The provisions of the Consumer Real Estate Settlement Protection Act may not be varied by agreement, and rights conferred by this chapter may not be waived. The seller may not require the use of a particular settlement agent as a condition of the sale of the property.
Especially in the current market in the DC area, where many listings are for bank-owned or short-sale properties where the buyer is asked to sign a bank addendum that is often both written to cover all 50 states and to protect the bank at the expense of the buyer, it’s important for buyers and their agents to know that their right to choose a settlement agent that will protect their interests is sacrosanct in Virginia, and this change in CRESPA goes a long way to making it easier to convince the selling/approving bank of that as well.
Possibly related posts (automatically generated):
- Short Sale & Foreclosure Resources for Buyer Agents
- An Overview of Buyer Agency In The Metro DC Area
- Lease/Purchase: An Alternative For Buyers Who Have Recently Done A Short Sale
- FHA announces new guidelines for post-short-sale mortgages
- Welcome to Ethical Homes
- New Property Disclosure Form in Virginia
- How Long Do You Have To Wait After A Short Sale Before You Can Get A New Mortgage?
- The difference between Down Payment and Deposit
- Auction Services (for listing agents)
- Financing For Buyers Of Recently Purchased Properties (aka Flipped Homes)
susan chambers
on Mar 18th, 2010
@ 5:08 pm:
RE: CRESPA UPDATE Does the buyer in Virginia have the right to change settlement company after the contract has been ratified and the VA Jurisdictional Addendum has been ratified stating a settlement company? Would like to know what the CRESPA laws say about that. susan
sweth
on Mar 18th, 2010
@ 6:52 pm:
Susan — I’m not a lawyer, and you should definitely consult a lawyer if you’re in an ongoing transaction where this is an issue. If you need a rec to a good real estate attorney, let me know. With that said, in my experience CRESPA doesn’t address that specific question directly; it has language that some lawyers that I know interpret as saying that it does allow a change in settlement companies, while others interpret as saying that it doesn’t. Again, if this becomes an issue for you, you should consult a lawyer before exposing your client to potential risk by making a change like that if the other side doesn’t cooperate.
Note, however, that you could probably bypass any issues of this sort altogether by having a “split settlement”, where the buyer has their own settlement agent handle their half of the transaction while the seller has a different settlement agent handle the other half; I’ve literally never had a case where a split settlement was proposed where both sides didn’t eventually agree to conduct settlement that way. It may involve a little more hassle (and potentially slightly higher costs) for both sides, but if both sides feel strongly about who their settlement agent is, they’ll almost always be willing to deal with that extra hassle to get to use their chosen agent.
If you want to look at the relevant statutes yourself, the relevant portions for your question of CRESPA would probably be Virginia Code 6.1-2.21, which says:
and Virginia Code 6.1-2.22, which says in part:
Some people would say that the “variation by agreement” clause above means that any selection of a settlement agent in the contract is an attempt to waive the buyer’s rights under CRESPA, which is not allowed, but others would say that if the seller did not require the use of a particular settlement agent as a condition of sale, then the selection of a settlement agent in the contract is actually the buyer exercising their rights under CRESPA, in the same way that filling in a delivery address in the POA clauses in the NVAR Virginia Jurisdictional Addendum would be the buyer exercising their rights under the Virginia POA Act (which also cannot be varied by contract).
So, again, if you can’t resolve this issue in a way acceptable to all parties, please contact a lawyer.
myEnergyLoan Provider Update « BLOG myEnergyLoan
on May 9th, 2010
@ 1:17 am:
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