New legislation that goes into effect in Virginia Tuesday will help speed up settlement of house sales.
Known as the "wet settlement act," the law is designed to prevent surprises for purchasers and sellers, said real estate broker Donald Childress. Childress, a former president of the Northern Virginia Board of Realtors, had supported the bill, introduced by Sen. Wiley F. Mitchell Jr. (R) of Alexandria.
Childress described the law as consumer-oriented because it assures that "there will be money from buyer and lender on the table at settlement" and that sellers will get their money within 48 hours after settlement attorneys record the transactions. Also, the buyers will get keys to their property and assurance of a legally supportable title.
A "wet" settlement simply means "money on the table," in contrast to what often formerly were "dry" settlements where no money actually changed hands. "There was often a delay of seven to 10 days while the attorneys reviewed papers, got the funds, disbursed them and recorded the deed," Childress said.
He added that sellers often had to continue paying interest on their mortgage loans for additional days after the "dry" closings.
The new Virginia law also requires lenders to disburse funds to the settlement agent at or before the closing of the old loan. The former lender will not be entitled to receive or charge any interest on the loan until disbursement of loan funds and closing of the new loan.
The settlement agent must record the deed, any mortgage or deed of trust and other documents and disburse settlement proceeds (including those to lenders with a collectible note and commissions to real estate brokers) within two business days of the actual settlement procedure.
People who lose money when their money is not disbursed on time can recover -- in addition to actual damages -- double the amount of any interest collected in violation, plus reasonable attorney fees incurred in the collection.
Similar legislation is in effect in Maryland.