LEO: Real Estate - Wet Settlement Act LE Op. 900
Real Estate - Wet Settlement Act.
March 17, 1987
Under the Wet Settlement Act, it is not improper for an attorney to
distribute funds after delivery of a deed or a deed of trust to the
clerk's office as long as some type of written receipt or proof is
As a practical matter, an attorney might arrange for a form to be used
which sets forth the particulars of a given instrument and could be
stamped at the clerk's office as proof of delivery of the instrument(s)
described therein. However, such instructions or requirements as imposed
on the attorney by the borrower or lender might involve far more than is
contained in the act. The certification of the priority of a deed of trust
is not required under the act, but may be required by the instructions of
the lender. Provided the instructions of the principal of the attorney are
lawful, the attorney has a duty to comply with the instructions. Should it
be impractical to follow the principal's instructions, the attorney has a
duty to notify the lender or principal. The attorney has a duty to comply
with the terms of the Wet Settlement Act and to the extent that the
instructions of the attorney's principal would necessitate the attorney
breaching the act, the attorney must advise the principal and comply with
It is improper for an attorney to disregard instructions by a lender not
to disburse until the attorney can certify that the lender has a perfected
first lien against the security subject only to current taxes, easements
and other permitted encumbrances. If, however, following this instruction
would necessitate noncompliance by the attorney with the Wet Settlement
Act, the attorney must advise the principal or lender that there is no
practical manner by which the legal requirements of the Wet Settlement Act
may be met absent the principal or lender revising the instructions.
"Table disbursements" are a matter of ethics. An attorney is not released
from ethical conduct because the attorney is covered by "insured closing
services" coverage provided by title insurers which guarantee
reimbursement of any loss arising from the attorney's failure to record.
If it is assumed that an attorney has provided protection against loss of
any funds by any party to the transaction as a result of any conduct by
the attorney, the committee suggests that the attorney present such to the
lender principal and obtain revision of the instructions which would
require noncompliance with the Wet Settlement Act.
The passage of amended Senate Bill 536 may revise or moot this opinion. [
LE Op. 813; Code of Virginia §§ 6.1-2.13 and 17-79]
Committee Opinion March 17, 1987
See also LE Op. 1255.