Virginia State Bar

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CRESPA Overview

 

The Virginia State Bar (VSB) Council at its October 1996 meeting in Roanoke voted to approve and recommend to the Supreme Court adoption of Unauthorized Practice of Law Opinion #183. This opinion held, in essence, that the closing of a real estate transaction in Virginia constitutes the practice of law, and its adoption by the Court would have meant that non-lawyers would have been barred from conducting such closings.

While the opinion was pending at the Virginia Supreme Court, the 1997 General Assembly took action in this area by passing the Consumer Real Estate Settlement Protection Act (CRESPA or the Act). The Act authorizes licensed Virginia attorneys to serve as settlement agents and provide "escrow, closing or settlement services" if they register and meet other conditions of the Virginia State Bar. CRESPA went into effect July 1, 1997 and can be found at Virginia Code Sections 6.1-2.19 through 6.1-2.29.

During the 2009 legislative session, the Virginia General Assembly made changes to the Act’s registration requirements with the passage of Senate Bill 938 http://leg1.state.va.us/cgi-bin/legp504.exe?091+ful+SB938.  Under current law, title insurance agents and title companies are required to register with the VSB before acting as settlement agents in Virginia. However, beginning July 1, 2009, title insurance agents and companies no longer register or renew with the VSB, but will instead be required to register and renew with the Bureau of Insurance.

In summary, CRESPA:

  1. Requires all attorney real estate settlement agents conducting residential closings to register with the Virginia State Bar and establishes certain public protection measures;

  2. Leaves in place the bar's unauthorized practice of law enforcement authority and makes it clear that legal advice in connection with a real estate settlement can only be provided by a licensed Virginia attorney;

  3. Requires the VSB to develop unauthorized practice of law (UPL) guidelines applicable to the real estate settlement field for the purpose of assisting attorney real estate settlement agents in avoiding and preventing the unauthorized practice of law; and provides for significant penalties for violations of the Act.
The Virginia State Bar has issued regulations governing the registration procedures for all attorney real estate settlement agents, as well as the certification that will be required of all attorney real estate settlement agents regarding the public protection measures required of them.

The bar's UPL Committee has also issued UPL guidelines as required by the legislation. The bar's CRESPA regulations, Unauthorized Practice of Law (UPL) guidelines, registration forms, attorney financial responsibility certification form, and surety bond forms may be obtained at http://www.vsb.org/site/regulation/crespa/.

UPL Op.#183 was approved by the Virginia Supreme Court on September 25, 1998, but the opinion was revised to explicitly recognize the right of lay settlement agents, as authorized under CRESPA, to close residential real estate transactions. Thereafter, the General Assembly acted again in this area by enacting the Real Estate Settlement Agent Registration Act (Va. Code §§6.1-2.30, et seq.) which became effective July 1, 1999. This new act states that if a non-lawyer is properly registered as a CRESPA settlement agent, he or she may perform escrow, closing and settlement services for any real estate located in the Commonwealth. Thus, properly registered lay settlement agents may now handle commercial as well as residential closings. Attorneys, however, are not required to meet CRESPA's requirements in order to close commercial real estate transactions.

9/16/09

 

 

Updated: January 5, 2010