3.4 Virginia Settlement Procedures
Key Takeaways
- Virginia is an 'attorney-optional' settlement state; closings may be conducted by attorneys, title companies, or licensed/exempt settlement agents regulated under CRESPA (Va. Code § 55.1-1000 et seq.).
- Federal TRID rules require the Closing Disclosure to reach the borrower at least three business days before settlement; certain changes trigger a new three-day waiting period.
- Virginia's state recordation tax is $0.25 per $100 of value; the grantor's tax is $0.50 per $500; localities may add up to one-third of the state recordation tax.
- General warranty deeds give the buyer the most protection; special warranty deeds cover only the grantor's ownership; quitclaim deeds give no warranty.
- Deeds are recorded with the Clerk of the Circuit Court in the locality where the property lies, and first-to-record generally takes priority.
Who Conducts a Virginia Settlement
Virginia calls closing settlement. It is an attorney-optional state — you do NOT need a lawyer to close. Settlement may be conducted by an attorney, a title insurance company, or a non-attorney settlement agent, all regulated under the Consumer Real Estate Settlement Protection Act (CRESPA), Va. Code § 55.1-1000 et seq.
| Party | Role at settlement |
|---|---|
| Settlement agent | Conducts closing; must be a CRESPA-registered or exempt agent |
| Title company | Issues title insurance; often serves as the settlement agent |
| Attorney | May close AND give legal advice (only an attorney may give legal advice) |
| Lender | Delivers loan documents and funds |
| Real estate agent | Coordinates and attends but does NOT conduct settlement |
Under CRESPA, settlement agents must register, maintain the required errors-and-omissions and fidelity/surety coverage, handle escrow funds properly, and follow disclosure rules. A licensee may not perform settlement-agent acts unless properly registered.
Federal TRID Timing
The federal TILA-RESPA Integrated Disclosure (TRID) rules drive the pre-closing timeline for most consumer mortgages:
| Document | Timing |
|---|---|
| Loan Estimate (LE) | Within 3 business days of loan application |
| Closing Disclosure (CD) | Borrower must receive it at least 3 business days before settlement |
| New 3-day wait triggered by | APR increase beyond tolerance (>1/8% fixed, >1/4% adjustable), a change in loan product, or adding a prepayment penalty |
Minor fixes — a misspelled name, a small fee change within tolerance — do not restart the clock. This three-day rule is one of the most tested settlement facts.
Title Work Before Closing
A title examination searches the public land records to:
- Verify the chain of title back through prior owners.
- Identify liens, judgments, easements, and encumbrances.
- Produce a title commitment that sets the terms for the title insurance policy.
A standard owner's title policy protects the buyer against pre-closing defects; a lender's policy protects the lender's lien position. Exceptions noted in the commitment (e.g., a recorded utility easement) are not covered unless removed before closing.
Virginia Deeds and Their Warranties
The deed transfers title; its type determines how much the seller guarantees.
| Deed type | Protection | Typical use |
|---|---|---|
| General warranty deed | Greatest — warrants title against ALL defects, past and present, with full covenants (seisin, right to convey, quiet enjoyment, warranty, further assurance) | Standard residential resale |
| Special warranty deed | Limited — warrants only against defects arising during the grantor's ownership | Bank/REO and foreclosure sales |
| Quitclaim deed | None — conveys only whatever interest the grantor has, if any | Clearing clouds, transfers between family members or spouses in divorce |
Exam trap: a quitclaim does not mean the grantor has no interest — it means no promise about the interest conveyed.
Virginia Transfer and Recordation Taxes
Memorize these exact rates; the exam tests them numerically.
| Tax | Rate | Customarily paid by |
|---|---|---|
| State recordation tax (deed) | $0.25 per $100 of value (or fraction) | Buyer (often) |
| Grantor's tax | $0.50 per $500 of value (or fraction) | Seller |
| Local recordation tax | Up to one-third of the state recordation tax | As negotiated/buyer |
Worked Tax Calculation
On a $300,000 sale:
- State recordation tax: $300,000 / $100 = 3,000 units × $0.25 = $750 (buyer).
- Grantor's tax: $300,000 / $500 = 600 units × $0.50 = $300 (seller).
- Local recordation tax (max): up to $750 / 3 = $250.
Some high-traffic regions (Northern Virginia, Hampton Roads) add regional grantor's/transportation surcharges, but the base statewide rates above are the ones the exam expects.
Prorations at Settlement
Prorations divide ongoing costs fairly between seller and buyer as of the settlement date.
| Item | How it prorates |
|---|---|
| Real estate taxes | Split by the portion of the tax period each party owns; seller pays through the day before/of closing per contract |
| HOA/condo dues (prepaid) | Seller is credited for the unused prepaid portion |
| Collected rent (income property) | Buyer is credited for the post-closing portion |
| Utilities | Usually not prorated — accounts simply transfer |
Virginia commonly prorates real estate taxes using a 360-day banker's year or the actual calendar, depending on the settlement agent's convention and the contract. Always read whether the contract prorates "as of" the settlement date or the day before, because that single day shifts who is debited and who is credited on the settlement statement.
Recording and Priority
The deed (and any deed of trust) is recorded with the Clerk of the Circuit Court in the city or county where the property sits. Virginia uses a deed of trust, not a mortgage, as its security instrument, and uses non-judicial foreclosure through a trustee. Recording fees are charged per page plus the applicable taxes above.
Priority: Virginia follows a recording-act principle — generally first to record has priority among competing interests (a purchaser without notice who records first prevails). This is why prompt recording immediately after settlement matters.
Exam trap: The Real Estate Board does NOT record deeds. Recording happens at the Clerk of the Circuit Court; the REB only licenses and disciplines licensees.
On a $300,000 Virginia home sale, how much is the grantor's tax and who customarily pays it?
Which deed gives a Virginia buyer the broadest protection of title?
Under federal TRID rules applied at Virginia settlements, when must the borrower receive the Closing Disclosure?