- November 19, 1993
- All New Jersey Agents
- Opinion 26 - Status of Litigation
At the November 18, 1993 meeting of the New Jersey Land Title Association (NJLTA) Board of Governors, the Executive Director of the Association reported on the status of the pending litigation concerning the implementation of ethics Opinion No. 26.
As you are aware this litigation concerns whether or not the conducting of a real estate settlement (closing) is the unauthorized practice of law. As I previously reported to you the matter was scheduled for hearings before Judge Miller on October 18, 1993 but was postponed because the parties are actively pursuing a settlement of the matter. During the past month representatives of the Bar Association, the Title Association, the Realtors Association and others have met to try to reach an agreement. While no settlement has been achieved and any partial agreement on any one point would not be binding on any party unless a full settlement is reached, I believe it is important to keep you fully informed as to the progress of the settlement talks. The following is an outline of the status of the talk.
- Title companies and licensed agents are authorized to conduct real estate settlements (closings).
- Title companies and licensed agents may not represent parties to the transaction, nor provide legal advice.
- Title companies and licensed agents may prepare and file notices of settlement.
- Title companies and licensed agents may help parties complete affidavits of consideration and title affidavits, but may not prepare other documents such as deeds, mortgages, etc.
- At the time of execution of the real estate contract the buyer will be given a written notice to the effect that real estate transactions are complex matters involving a lot of money and he/she should consult with an attorney. It will not state that the buyer can have the transaction settled by a title company as was previously reported.
- When the title commitment is issued, title companies will be required to mail a copy of the commitment directly to the buyer's home (and maybe the seller's home) with the "Sears" notice which will advise the potential insured that he/she has a right to have the settlement conducted by the title company and that if the insured wants the transaction closed by an attorney there is a possibility that the attorney may steal the closing funds, in which case the title company will not be liable for the loss.
Obviously many other matters involved in the settlement process need to be worked out before any final settlement can be achieved. At this time it is unlikely that the parties will reach a settlement before January. After the matter is settled, it will be subject to review and approval by the Boards of Directors of the Bar Association, the NJLTA and the Realtors, before going to the State Supreme Court. After the Supreme Court approves the settlement, it may still have to be approved by the Department of Insurance and the Real Estate Commission. The entire process may take over a year to complete.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- 5.16 Escrow Closings
- Exceptions Manual: