Another Update on “Split Settlements” in Virginia @VAStateCorpComm @VAHouse @VASenate @GlennYoungkin @WinsomeSears @OpenVaLaw #VABOI #BOI #insurance #Virginia #realestate #vasenate

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Today, I received another obnoxious email from a self-serving attorney, so here’s another post.

Repeating what I’ve previously written, the Virginia Bureau of Insurance (“BOI”) published Letter 2022-01 in February, 2022, stating that they interpreted Virginia Code § 55.1-900, et seq. and § 55.1-1000, et seq. to prohibit the long-standing practice of “split settlements.” The letter (of course) didn’t change the law, regulations, rules of legal ethics, or even the standard contracts used throughout Virginia. It’s purpose was to tell our industry that our practices must change because those long-standing practices are illegal. Because this would cost many attorneys money, they’ve resisted change, but that places law-abiding lay title companies and attorneys in a quandary. In order to comply with the BOI’s instructions, they must require change, but the arrogant, unethical attorneys — in particular, the ones from Central Virginia whose practices were the primary target of letter — refuse to do so.

The Law

In the interests of space, I’m not going to repeat my arguments from prior posts. I’m simply making my assertions, then linking to the prior posts if you want to understand why my assertions are clearly correct.

The Apple of Discord
More on Split Settlements

Today, I mention only information not previously discussed by me, and here’s a bit of that. The law I’ve cited was passed in 1997, acknowledging, as many states do, that pricey attorneys aren’t necessary to perform settlement services that don’t constitute the practice of law. That’s actually a fair number of services, most of which are listed in § 55.1-1000 (“Escrow, closing, or settlement services”) and defined by law as lay title services. Thus, the law was designed to save consumers money. This is no surprise to anyone in the industry. I’d say the fees for my employer are on the high end for lay title companies, and they still fall as much as $600 below what attorneys charge for the same services. As I’ve shown, many attorneys are charging in clear excess of $1,000 for services, most of which they don’t even perform, but in any event are not permitted to perform without the settlement agent’s permission.

Try to tell an attorney what to do. Go ahead. I dare you.

As an aside, the 1997 laws rendered many legal ethics opinions (“LEOs“) largely moot, and to the extent that these LEOs are still viable, they very much cut against the arguments made by seller-side attorneys. Their arguments continue to be embarrassingly bad, thus solidifying my assertion that they know they’re wrong and are grasping at whatever straws they can to justify their behavior because there’s nothing anyone will do about it.

What’s New?

Unfortunately, not much is new, but no news is still news, as it speaks volumes as to how certain regulatory agencies think. First off, a reminder. I’ve spoken with the offices of my state Senator and Delegate. While I’ve kept them in the loop, I’ve heard nothing back from them since our Zoom call. This is understandable, as the legislature has much bigger fish to fry and tend to rely on the Executive Branch’s regulatory agencies to handle the day to day of enforcing the law. Therein lies the rub. The regulatory agencies aren’t doing anything.

Request for an LEO

After receiving no help from the Bureau of Insurance despite their authority to suspend the title insurance licenses of these attorneys, my next regulatory target was the Virginia State Bar (“VSB“). In early July, I drafted a comprehensive request for an LEO with a fact pattern that covered all the ethics violations attorneys have been committing throughout Virginia. Remember, these practices have been the industry standard despite the 1997 law, and started long before BOI Letter 2022-01 put these attorneys in a tailspin, so this is no small matter. Ethics counsel informed me that they had received multiple calls and emails from these settlement attorneys defending their positions. Counsel had a completely skewed view of the facts and law, which I assume means that these attorneys were lying to them. I set counsel straight providing citations to support all of my assertions. They were impressed but said they needed to get back to me after suggesting edits. (My request was, as you might expect, quite wordy. There’s a lot of unethical behavior to address.)

And now that brings me to today’s concern. Counsel has refused to respond to my further attempts to contact them. They’ve simply cut me off. I was warned that my request might be refused because of the Committee’s desire to “stay out of it,” but didn’t want to believe that. The Committee isn’t protecting the public from unscrupulous attorneys, but their silence instead protects those attorneys’ wallets.

The VSB won’t provide a general statement telling attorneys that certain behavior is (or isn’t) violating the law and rules of ethics; the BOI won’t supplement its statement to clarify that certain behavior is (or isn’t) violating the law; and the legislature is too busy dealing with the fallout of Dobbs (among other politically hot issues) to deal with something about which the average voter doesn’t care. The only option I have to fix the long-standing and widespread wrongs of these attorneys is to start filing complaints against them with both the BOI and the VSB. I even warned the VSB I was going to start doing that. Complaints can’t be ignored, but they can be dismissed as baseless even if they aren’t. If the VSB stood by the attorneys despite how clearly wrong they were, then I could go to the legislature and say, “This is what self-regulation looks like. It’s a scam designed to fool you into believing the VSB’s Ethics Committee is there to protect the public.”

In other words, the only choice I have on the table is to commit professional suicide. (I’ve arguably already professionally maimed myself.) The VSB has likely ignored me because they believe I won’t do that. Maybe I won’t, but if I don’t, it won’t be my loss; it’ll be yours. This will be yet another one of those hidden things (e.g., the monopoly on glasses) that harms everyone, but because too few people know the true source of the harm, or even that they’re being harmed in the first place(!), nothing ever gets fixed.

Think about that.

If you want this change to occur, please retweet my tweet. Your retweets will each tag the relevant authorities that should give me an audience.

Otherwise, nothing changes, and the public will continue to suffer.

Follow me on Twitter @PropertyAtty
Follow the BOI @VAStateCorpComm
Follow the Virginia House @VaHouse
Follow the Virginia Senate @VASenate
Follow Governor Glenn Youngkin @GlennYoungkin
Follow Lt. Governor Winsome Sears @WinsomeSears
Follow Open Virginia Law @OpenVaLaw



Filed under Administrative Law, Insurance Law, Real Estate Law, Title Insurance

2 responses to “Another Update on “Split Settlements” in Virginia @VAStateCorpComm @VAHouse @VASenate @GlennYoungkin @WinsomeSears @OpenVaLaw #VABOI #BOI #insurance #Virginia #realestate #vasenate

  1. Pingback: Excluding Lay Title Companies from the Seller Side of Real Estate Transactions in Virginia @VAStateCorpComm @VAHouse @VASenate @GlennYoungkin @WinsomeSears @OpenVaLaw #VABOI #BOI #insurance #Virginia #realestate #vasenate #VSB | The Property Attorney

  2. Pingback: Smug Seller-Side Attorneys Are Getting Worse @VAStateCorpComm @VAHouse @VASenate @GlennYoungkin @WinsomeSears @OpenVaLaw #VABOI #BOI #insurance #Virginia #realestate #vasenate #VSB | The Property Attorney

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