Beyond a title agents’ many duties to the title insurer, title agents must fulfill significant obligations to other parties to the transactions before them. While many of these duties are created by contract, other duties have been imposed upon title agents either by courts or by the legislature. While many of our responsibilities are defined by statute, courts have frequently augmented these statutes by imposing what lawyers call "tort duties" which often expand the title agent’s typical role in a transaction. To avoid liability under Maryland law and under federal law, title agents must go into each settlement with a full understanding of their legal obligations and their duties to buyers, borrowers, sellers and others involved in these transactions.
Far from a simple job, settlement agents are called upon to perform a wide variety of tasks, which may include:
- Conducting title searches and preparing abstracts of title;
- Reviewing the status of the title in the title commitment, resolving any exceptions to the title, and reviewing the purchase agreement to identify any requirements in it in order to ensure compliance with this fundamental contract;
- Verifying the payment of existing loans secured by the real estate;
- Verifying the amount of special assessments and calculating taxes on the property;
- Obtaining an updated title insurance commitment to the date of closing;
- Preparing the required checks, deeds, affidavits, and obtaining any authorization letters needed;
- Establishing a time and place for the closing, conducting the closing, and ensuring that all parties properly execute all appropriate documents and meet all commitments;
- Collecting and disbursing funds for the parties;
- Holding funds in escrow pending satisfaction of certain commitments;
- Preparing Significant Paperwork - including the HUD-1 Settlement Statement, the mortgage, the deed of trust, and, where applicable, the Truth-in-Lending Statement, and the purchaser's affidavits; and
- Recording the appropriate documents as required under law.
In performing these tasks, the settlement agent is responsible to all parties to the transaction to follow precisely, and without special advantage to one party over another, the respective agreements between the parties. Generally, the settlement agent owes duties to at least three parties: (1) the buyer/borrower; (2) the seller; and (3) the mortgage lender, if any. A failure to fulfill these obligations can invite private lawsuits, administrative actions that may jeopardize one’s license to conduct settlements, or even criminal prosecution.