Are you aware that most title underwriters, lenders, and insurers are now requiring real estate attorneys/title agents (“title agents”) to maintain a Best Practices Policy and Procedures Manual (“Manual”)? In fact, some title underwriters may “drop” or not approve a new title agent if there is no Manual in place and lenders have been known to prohibit a title agent from closing a transaction and issuing a lenders title policy without the existence of a Manual. We are now seeing some E & O insurers require a Manual before they will agree to provide coverage. Keep in mind that best practices was initially a voluntary tool to help the title industry highlight the safeguards in place to ensure that closing activities meet all applicable laws and regulations, but as you can now see there is a subtle push to mandate the Manual.
The purpose of the Manual is to address policies and procedures to protect lenders and consumers while ensuring a positive and compliant closing experience. Items that are typically included in the Manual are the following:
- Licensing information
- Written procedures for Escrow/Trust Accounting
- Privacy and Information Security
- Document Recordation Procedures
- Title and Settlement Pricing and Procedures
- Title Policy production, delivery, and reporting
- Professional Liability Insurance coverage
Before referring a client to a title agent you may want to consider asking to review its Manual. If a Manual cannot be provided you may want to reconsider the referral, as it could impact the closing and possibly create liability for you due to a negligent referral.
As always, if you have any questions concerning the foregoing, we urge you to consult with your real estate attorney.
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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