Skip to Content
NewsResidential Real Estate Update

Real Estate Settlements Alert: New Guidance for Virginia Settlement Agents Regarding Split Settlements

February 10, 2022



Did you know that Virginia’s Bureau of Insurance issued an administrative letter notifying settlement agents that Virginia’s applicable statutes and regulations do not authorize split settlements?

On February 4, 2022, Virginia’s Bureau of Insurance (“Bureau”) issued Administrative Letter 2022-01 notifying settlement agents that the Real Estate Settlements Act, § 55.1-900 et seq. of the Code of Virginia (“Code”), and Real Estate Settlement Agents Act, § 55.1-1000 et seq. of the Code, contemplate only one designated settlement agent performing the required activities and tasks for any particular real estate transaction.  As such, the Bureau views participation in split settlements by settlement agents as a violation of Virginia law. 

A real estate settlement consummates the sale, transfer, refinancing or other similar transaction related to real property.  The settlement agent is responsible for performing the “escrow, closing or settlement services” prescribed by the Code, and must handle funds in a fiduciary capacity.  “Escrow, closing or settlement services” means the administrative and clerical services required to carry out the terms of contracts affecting real estate, including: placing orders for title insurance, receiving and issuing receipts for money received from the parties, ordering loan checks and payoffs, ordering surveys and inspections, preparing settlement statements or closing disclosures, determining that all closing documents conform to the parties’ contract requirements, setting the closing appointment, following up with the parties to ensure that the transaction progresses to closing, ascertaining that the lenders’ instructions have been satisfied, conducting a closing conference at which the documents are executed, receiving and disbursing funds, completing form documents and instruments selected by and in accordance with instructions of the parties to the transaction, handling or arranging for the recording of documents, sending recorded documents to the lender, sending the recorded deed and the title policy to the buyer, and reporting federal income tax information for the real estate sale to the Internal Revenue Service. 

The Code provides that the purchaser or borrower shall have the right to select the settlement agent to provide escrow, closing or settlement services in connection with the transaction, which right cannot be varied by agreement or waived.

A split settlement occurs when the escrow, closing, or settlement tasks for which the settlement agent is responsible are divided (or split) between two or more individuals or entities.  There are a variety of factual scenarios that result in a split settlement, but the typical split settlement occurs when the purchaser and seller select separate settlement agents, and those settlement agents divide the escrow, closing or settlement services respective to each party’s responsibilities in the transaction.  For example, the purchaser’s settlement agent examines title, prepares and coordinates purchaser’s signatures on closing documents, records documents, receives and disburses funds, and issues title insurance, while the seller’s settlement agent obtains mortgage payoff statements and HOA/condo account statements, provides information pertaining to sale to the purchaser’s settlement agent, and prepares the deed and coordinates seller’s signatures on closing documents.  According to the Bureau, “[w]hile the Code does not prohibit the settlement agent from retaining or engaging other individuals or entities to assist with performing certain administration components of the settlement transaction, it is ultimately the settlement agent, as identified by the buyer, who must perform all of the settlement services prescribed by the Code.”  Accordingly, the Bureau’s position is that Virginia’s applicable statutes and regulations provide for one settlement agent, selected by the buyer and designated on the settlement statement, who is responsible for all of the escrow, closing or settlements services prescribed by the Code.  As such, the Bureau views participation in split settlements by settlement agents as a violation of Virginia law. 

The Bureau has acknowledged a high volume of questions regarding this Administrative Letter, and we will pass along additional information as we receive it.


For more information regarding our Residential Real Estate Settlements Group or our general real estate transactions and litigation practice, please contact the Group Chair at

This Alert is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.