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

the act.


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.