Choices

I just ordered a cake from Brusters Ice Cream for my daughter’s birthday party.  So many decisions; vanilla cake or chocolate, type of filling, ice cream flavor, icing color and so on.  A lot of choices for a cake that costs less than $40 and don’t even get me started on decisions to be made for a $5 cup of coffee at Starbucks!  We, as Americans, love to have choices, and fortunately we live in a place where we have so many options for food, careers, education, housing, etc…  However, does anyone find it ironic that when most people buy a home, their biggest asset, they don’t realize that they have a choice as to the closing attorney?  Yes, homebuyers can choose the law firm that they want to handle their closing process.

The buyer has the right to name the closing attorney on their purchase contract.  As closing attorneys, we are involved in the entire closing process, making sure all parties are coordinated, moving money, and making sure that the property you are buying is free from liens and ownership issues.  Think of us as air traffic control.  All of our attorneys have been handling real estate closings for years and our firm was initially opened in 1996.  We assign each closing to a dedicated professional rather than passing the file to a new person for each step of the process.  Our attorneys are accessible to address buyer concerns and we make closings convenient and efficient for all parties.  You would think these would be standard practices with all closing firms, but I encourage you do the research and discover that at Sherman & Phalen, you will receive a higher level of service at competitive attorney fees. 

On your next property purchase, don’t let someone else dictate who your closing attorney will be.  Give us a call and ask that we be named on the contract.  After all, you don’t want someone else making your Starbucks decisions and that’s only a cup of coffee!

Title Insurance Can Save Your Life

Well, maybe not literally, but 100% of first mortgage lenders cannot live without it. The American Land Title Association (ATLA) estimates title problems arise in 36% of property transactions.  Why wouldn’t a lender want insurance protecting their security with those types of odds?

Whether a borrower is purchasing a new home or refinancing an existing one their lender will require the purchase of a lender’s title insurance policy.  Such a policy protects the lender from loss or damage resulting from liens, encumbrances, or defects in the title to the property given as security in exchange for loan. In much the same way title insurance can protect property owners too.

The first step in issuing a policy of title insurance is the title search.  The closing attorney performs or orders the title search which includes a search of the tax and deed records for the property given as security.  The search is to determine if any taxes are owed, the names of the property owners, and whether there are any existing liens on the property, including mortgages, judgments, and tax executions.

The most common problems uncovered by a title search involve missing releases or satisfactions for paid off liens or mortgages, followed by misspelled names and incorrect legal descriptions.  Although infrequent, the most troublesome title issue to correct involves estates of deceased property owners. Prior to closing and issuing a title policy the closing attorney will work to correct any issues found during the title search. But even the best title search cannot uncover forgeries, unknown heirs, or misindexed documents. That’s where title insurance comes in.

Lenders rely on title insurance to protect their asset (the loan) and insure the marketability of the debt (most all loans are packaged and sold to an investor). Home owners when buying property should follow suit and protect themselves from loss too.

Contact us for a title insurance quote or find title premium calculators on our homepage.

We added another state!

Sherman & Phalen is pleased to announce we can now close real estate transactions in South Carolina and offer title insurance through Old Republic Title Insurance Company.  If you have real estate closing needs in Georgia, Florida, or South Carolina, we can help.  Call one or our attorneys or staff or email us for more information.

New Website, New Services

Sherman & Phalen has a new website to go along with new services! We are excited to now offer commercial title services providing title search and insurance products to commercial lenders and processing services to assist Georgia attorneys that may have a real estate client but not the time, experience, or resources to close their transactions.

We still close purchase and refinance transactions any where in Georgia and Florida.  Let us know how we can help you!

Georgia Good Funds Law

Are you complaint with Georgia’s revised Good Funds Law?  We are! In 2012 the Georgia Legislature revised the Georgia Good Funds Law to require either the lender or a Georgia licensed attorney settle and disburse any Georgia, lender-funded, residential real estate transaction.  Our attorneys and staff can close on any transaction, anywhere in Georgia, in compliance with these new requirements. 

Georgia law (O.C.G.A Section 44-14-13, the "Good Funds" law) requires all funds to be received by the closing attorney in excess of $5,000.00 be “good funds”. Our firm policy is as follows:

  • We will accept personal checks up to $2,000.00
  • For amounts between $2,000.00, up to and including $5,000.00, a Cashier’s Check issued by a local or national bank or credit union will be accepted.
  • For amounts more than $5,000.00 our firm requires funds be transmitted to us by wire.

The State Bar of Georgia Drafts New Rules Requiring Attorney Supervision of Real Estate Closings

Following on the heels of the General Assembly’s passage of Senate Bill 365, which supported the role of Georgia attorney’s in the real estate closing process, the State Bar of Georgia published Proposed Formal Advisory Opinion No. 10-R2 in the August 2012 edition of the Georgia Bar Journal.

The Opinion brings together in one coherent rule the various Supreme Court decisions and Bar opinions governing the closing of real estate transactions.  Importantly the Opinion for the first time sets out, at a minimum, those events in a real estate closing that comprise the practice of law, namely; “(i) rendering an opinion as to title and the resolution of any defects in marketable title; (ii) preparation of deeds of conveyance, including warranty deeds, quitclaim deeds, deeds to secure debt, and mortgage deeds, (iii) overseeing and participating in the execution of instruments conveying title; (iv) supervising the recordation of documents conveying title; and (v) collecting and disbursing funds exchanged in connection with the closing of the transaction.”

The Opinion draws upon Supreme Court’s expansive view of what constitutes the practice of law in a real estate closing to encompass “all of the continuum of activities that are part of the process by which real estate transactions are closed and land is conveyed. . .”

Together with the revised Good Funds Law, this draft Opinion firmly supports the notion that the public interest is best served when a Georgia attorney directly supervises all aspects of a real estate closing.

At Sherman & Phalen our attorneys directly oversee and are responsible for every step of the closing process. Contact any one of our attorneys to discuss your real estate closing needs.

New Laws in Georgia Require An Attorney Settle and Disburse Residential Real Estate Transactions

Like its sister states, North Carolina and South Carolina, Georgia has long been an “attorney state” when it comes to closing residential real estate transactions.  And in this year’s legislative session two new laws were passed putting Georgia more in line with its neighbors.

Georgia has a long tradition which requires that attorneys close residential real estate transactions.  This tradition is founded in statutory and case law, as well as the rules of the State Bar of Georgia.  Recent years have seen the influx of corporate settlement companies into the state, similar to recent practices in South Carolina and North Carolina.  Senate Bills 365 and 331 passed into law this year will greatly limit the ability for non-attorneys to conduct or even participate in  the closing a residential real estate transaction in this state.

Senate Bill 365 revised O.C.G.A. § 44-14-13, the Georgia Good Funds Act.  The previous version of The Good Funds Law was enacted in 2008 in response to the HomeBanc crisis which left real estate attorneys holding uncollected funds in their escrow accounts when that lender went out of business.  It only applied to residential, lender-funded transactions, and while outlining what constitutes collected funds, the code section also defined participants and aspects of a transaction.

SB 365 made several significant changes to this Code Section.  First, and most importantly, it redefined the term “settlement agent” to mean only the lender[1] or an active member of the State Bar of Georgia.  Stricken from the definition were individuals, corporations, partnerships, or other entities.  Thus, only the lender or a Georgia attorney is allowed to settle or disburse a residential, lender-funded closing.  The terms “disbursement of settlement proceeds” and “settlement” were unaltered.  “Disbursement of settlement proceeds” still means the “payment of all proceeds of the transaction by the settlement agent to the persons entitled thereto;” and, “settlement” still means the “time when the settlement agent has received the duly executed deed to secure debt and other loan documents and (loan) funds. . .” In practice, only a lender or a Georgia attorney can receive executed loan documents, and collect and disburse closing funds.

The second major revision is a provision for criminal liability arising from someone other than the lender or a Georgia attorney acting as a settlement agent.  Section (f) of the revised Code Section reads:

Any individual, corporation, partnership, or other entity conducting the settlement and disbursement of loan funds, when he, she, or it is not the settlement agent, shall be guilty of a misdemeanor.

The revision also provides for civil liability of no less than $1,000.00, plus actual damages and reasonable attorneys’ fees to the party suffering a loss resulting from a violation of the Code Section. 

The SB 365 revisions went into effect July 1, 2012.

The second piece of legislation impacting real estate transactions is Senate Bill 331 (“SB 331”).  It revised Title 33 of the Code relating to insurance to include closing protection letters (“CPL”) as a type of insurance which title insurers are authorized to issue.  Among other things the bill requires the collection of a premium when issuing a CPL and requires insurers to maintain adequate reserves to protect against losses suffered under those policies.  While the bill does not directly apply to real estate transactions, it does require the agent or agency issuing the CPL to also be the one responsible for disbursing the settlement funds.

Presumably, this requirement was simply intended to tie together the receipt of the premium with the issuance of the CPL policy.  But when read with the revisions to SB 365 it reaches past the mere issuance of an insurance policy.  If only a lender or Georgia attorney is allowed to settle and disburse a transaction, pursuant to SB 365, that means only a lender or Georgia attorney can be an issuing agent for closing protection letters, and ultimately, title insurance policies, at least in the context of residential, lender-funded real estate transactions.

SB 331’s revisions became effective upon the Bill’s signing by the Governor on May 2, 2012, and like SB 365, carry criminal liability for a violation.  See O.C.G.A. § 33-5-3.

In our opinion, lenders can conduct business as usual with respect to closing their own loans; which is typically the case with HELOCs and second mortgages where no title insurance is required. In the event a CPL is issued as a requirement for closing a residential, lender-funded real estate transaction, the issuing agent must be the lender or a Georgia attorney. Further, these laws will prohibit “witness only” closings whereby the only involvement by a Georgia attorney is to witness and notarize documents as Georgia attorneys typically do not collect or disburse funds under that approach.

The law firm of Sherman & Phalen has and will continue to operate consistent with these changes in Georgia law.  Our attorneys are responsible for supervising every aspect of a residential real estate transaction, from title, to settlement, and finally disbursement. Let us help you close your transaction in line with these new mandates.

[1] “Lender” is defined as “any person or entity regularly engaged in making loans secured by mortgages or deeds to secure debt on real estate.”