Fee Disclosure, E&O Limitations & Legal Ed Opportunities
Dear Members,
Let's get right into it today.
Itemization of fees and charges on closing statement. Nothing sparks a discussion amongst Members like a reminder of the rules and regs around fees and other costs regularly charged to buyers or sellers! Bob Rohan, our Regulatory Compliance Counsel, recently authored in article in The Fund Concept on this topic, which generated some questions and discussion. I commend the article to you (here is a link
https://www.thefund.com/member/fund-concept/january-2022/miscellaneous-fees-on-the-settlement-statement.aspx) but if you like bottom line rules, here is my best effort:
Disclose all of the fees you typically charge (list your closing services fee, too) to the buyer and seller prior to closing. Do it in writing (email is probably fine). Retain proof of this disclosure on every file.
Look at this from the regulator's perspective: don't advertise/disclose one fee and then have additional fees itemized on the closing statement when buyer gets to closing; regulators call this "bait and switch." They don't like it.
E&O limitations. We have had a couple of situations recently in which lenders would not accept a Member's E&O coverage because it was less than $1,000,000. Our minimum requirement of Members is $250,000 and with today's real estate market, I wonder if that is appropriate………… from both our perspective and YOUR perspective. So we are taking a look at this requirement. But the point of today's blog is to ask you to give it some thought. Look at your practice volume and average transaction amount. Do an honest evaluation of whether you should increase your coverage. You do not want to be put in the position of having to turn down a closing because the lender had higher requirements! Forewarned is forearmed!
Assembly 2022 is coming! This year we are holding New Member Training simultaneously with Assembly, which gives these new Members the opportunity to experience Assembly in all of its glory! They will be joining some Assembly presentations but otherwise will be in their own sessions. I love this idea. If it is really beneficial to the new class of Members, maybe we will incorporate it into future Assembly events. But for the rest of you, Assembly is a great opportunity to see old friends, make new ones, mingle with your underwriting staff and get excellent substantive information on top of it all! Early bird registration ends March 4 so register now. Here's a link to register https://www.thefund.com/assembly.
Tax season focus. The start of the baseball season appears to be in jeopardy, but sadly death and taxes never go on strike. Join our Legal Education Team in April for some great webinars that focus on tax-related issues that will help get your mind off missing Opening Day. We will be addressing some of our favorite subjects, such as FIRPTA and tax deeds, but I’m particularly excited to learn more about conservation easements and their tax implications. Make sure you are receiving the weekly Monday morning emails from the Legal Education team promoting all of The Fund’s webinars and educational events.
That's all for this week. Let me know how we can help you.
Melissa Jay Murphy
Executive Vice President, Chief Legal Officer,
and General Counsel
02/28/2022