CHAPTER 4

REAL ESTATE SETTLEMENT PROCEDURES

Best Practice #4: Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws as applicable to the settlement process.

Purpose: Adopting appropriate policies and conducting ongoing employee training helps ensure the Law Firm can meet state, federal, and contractual obligations governing the Settlement.

Law Firm Policies and Procedures for Implementation and Adherence to Best Practice #4:

  1. Recording Procedures

The Law Firm

  1. Reviews legal and contractual requirements to determine Law Firm obligations to record documents.
  2. Directs, supervises, submits or ships documents for recording in the proper order and with adequate and accurate legal descriptions attached (as applicable) to the county register of deeds for recording as soon as reasonably possible after execution and delivery of the closing documentsbut no later than within two (2) business days of the later of (i) the date of Settlement, or (ii) receipt by the Law Firm if the Closing and/or Settlement is/are not performed by the Law Firm.
  3. Tracks shipments of documents for recording.
  4. Ensures timely responses to recording rejections.
  5. Addresses rejected recordings to prevent unnecessary delay.
  6. Verifies that recordation actually occurred and maintains a record of the recording information for the document(s).
  7. Informs all parties to the transaction once the recordable closing documents are recorded.
  1. Pricing Procedures for Title Insurance and Closing Services

The Law Firm shall ensure that customers are charged the correct title insurance premium for title insurance coverage, and other rates for services provided by the Law Firm. These premiums are determined by a mix or legal and contractual obligations.

The Law Firm:

  1. Utilizes rate manuals and online calculators, as appropriate, to help ensure correct fees are being charged for title insurance policy premiums, state-specific fees, and endorsements.
  2. Ensures discounted rates are calculated and charged when appropriate, including refinance and reissue rates.
  3. Performs quality checks of files after Settlement to ensure consumers were charged the Law Firm’s established rates.
  4. Provides timely refunds to consumers when an overpayment is detected.
  1. Disbursement of Settlement Funds

The Law Firm shall disburse, or adequately supervise and control the disbursement of, all of the closing funds in accordance with the settlement statement and lender’s closing instructions after confirmation of recording, pursuant to the North Carolina Good Funds Settlement Act. The Law Firm shall make all reasonable efforts to be the party signing disbursement checks and initiating wire transfers. If circumstances prevent an attorney or authorized person employed by Law Firm from signing disbursement checks or initiating wire transfers for a given transaction, the attorney handling and supervising the closing and settlement services being provided shall double check the disbursement as soon as reasonably possible.

  1. Note for Refinances with Same Lender. The only exception to this guideline is when a borrower is refinancing a loan with the same lender and that lender is paying off its previous loan to the borrower with proceeds of the new loan to the borrower, neither the portion of the loan proceeds required to pay off the lender’s prior loan to the borrower nor the lender’s fees in connection with the new loan have to be disbursed by the Law Firm in accordance with the settlement statement.
  2. Disbursement Defined – Disbursement means that the Law Firm shall make payment of all closing funds from the transaction to the persons or entities entitled to that payment.
  1. Return of Loan Package. Law Firm shall send Loan Package to Lender in accordance with Lender closing instructions.
  1. Training
  2. Real estate attorneys and paralegals employed by the Law Firm shall attend at least annually updated CLE or CPE presentations addressing changes in the closing process, legal requirements, and other relevant information.
  3. Any issues will be discussed within the Law Firm on a regular basis to assure that all employees are well-educated on the requirements of their position and compliance with state and federal consumer laws.

There is additional information and guidance available regarding Best Practices for closing attorneys as to (i) adequate supervision of non-attorney assistants, (ii) malpractice insurance standards, (iii) pre-closing procedures and title services, (iii) closing related services, and (iv) post-closing services. These additional standards were developed by the North Carolina Real Estate Lawyers Association and are available on-line at .

Additionally, attached is an Appendix and Summary of North Carolina State Bar Rules of Professional Conduct and Formal Ethics Opinions which govern Real Estate Attorneys handling closings for North Carolina consumers.