15 Va. Admin. Code § 5-80-50

Current through Register Vol. 41, No. 8, December 2, 2024

Section 15VAC5-80-50 - Attorney settlement agent compliance

A. Attorney settlement agent certification. Each attorney settlement agent shall, at the time of initial registration and of each subsequent reregistration, certify on the form available from the Bar for that purpose, that the attorney settlement agent has in full force and effect the following insurance and bond coverages, and that such coverages will be maintained in full force and effect throughout the time the attorney settlement agent acts, offers, or intends to act in that capacity:

1. A lawyer's professional liability insurance policy issued by a company authorized to write such insurance in Virginia providing first dollar coverage and limits of at least $250,000 per claim covering the licensed attorney acting, offering, or intending to act as a settlement agent. The policy may also cover other attorneys practicing in the same firm or legal entity.

2. A blanket fidelity bond or employee dishonesty insurance policy issued by a company authorized to write such bonds or insurance in Virginia providing limits of at least $100,000 covering all other employees of the attorney settlement agent or the legal entity in which the attorney settlement agent practices.

3. A surety bond issued by a company authorized to write such bonds in Virginia, on a form approved by the Virginia State Bar, providing limits of at least $200,000 covering the licensed attorney acting, offering or intending to act as a settlement agent. A copy of the approved bond form is available from the Bar. The bond may also cover other attorney settlement agents practicing in the same firm or legal entity. The original surety bond must be attached to the attorney settlement agent's certification form and furnished to the Bar; a surety bond on which a law firm is named as principal may be furnished by the firm or any one attorney settlement agent in the firm, with other such attorney settlement agents in the same firm attaching a copy to their forms.

The Bar reserves the right to require other evidence of the insurance and bond coverages listed in this subsection beyond the attorney's certification and surety bond, at its discretion.

An attorney settlement agent who has no employees other than the attorney settlement agent or other than a licensed owner, partner, shareholder, or member of the legal entity in which the attorney settlement agent practices may apply to the Bar for a waiver of the coverage required in subdivision 2 of this subsection, using the form available from the Bar. Such waiver requests will be acted on by the Executive Committee of the Bar, whose decision shall constitute final action by the agency.

B. Separate fiduciary trust account. Each attorney settlement agent shall maintain one or more separate and distinct fiduciary trust accounts used only for the purpose of handling funds received in connection with escrow, closing, or settlement services. Funds received in connection with real estate transactions not covered by Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia may also be deposited in and disbursed from such accounts. All funds received by an attorney settlement agent in connection with escrow, closing, or settlement services shall be deposited in and disbursed from the separate fiduciary accounts in conformity with both the Bar's disciplinary rules and Chapter 27.3. These separate fiduciary trust accounts shall be maintained in the same manner and subject to the same rules as those promulgated by the Bar for other lawyer trust accounts, as well as in conformity with Chapter 27.3. One separate fiduciary trust account may be maintained and used by all attorney settlement agents practicing in the same firm or legal entity.

C. Settlement statements. All settlement statements for escrow, closing, and settlement services governed by Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia and this chapter shall be in writing and identify, by name and business address, the settlement agent.

D. Complaints against attorney settlement agents. The Bar shall receive complaints or investigate alleged violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter by attorney settlement agents. If, after investigation, the Bar does not have reasonable cause to believe that one or more violations of Chapter 27.3 or this chapter have occurred, the Bar may dismiss the complaint as unfounded.

If, after investigation, the Bar has reasonable cause to believe that one or more violations have occurred, the following procedures shall apply:

1. The attorney settlement agent shall be notified in writing of the alleged violations.

2. The attorney settlement agent shall have 30 days from the date of such notification to respond in writing to the alleged violations. If, after receipt of the response, the Bar no longer has reasonable cause to believe that one or more violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter have occurred, the Bar may dismiss the complaint as unfounded.

3. If the Bar believes the alleged violation presents or presented a risk to consumers protected under Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia, the Bar may request a hearing and issue an order requiring the attorney settlement agent to appear at the hearing, whether or not the attorney settlement agent has responded in writing to the notice of alleged violation or the 30-day response time period has lapsed.

4. In conducting investigations of alleged violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter by attorney settlement agents, the Bar, by Bar Counsel, shall have the authority to issue summonses or subpoenas to compel the attendance of witnesses and the production of documents necessary and material to any inquiry.

5. The following shall be applicable to hearings on alleged violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter:

a. Hearings shall be held before the disciplinary board within 60 days of the issuance of the Bar's order to appear.

b. The standard of proof of violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter shall be clear and convincing evidence.

c. Hearings shall be conducted in the same manner as attorney misconduct hearings as set out in Rules of Court, Part Six, Section IV, Paragraph 13.

d. Agreed dispositions may be entered into in the same manner as agreed dispositions at the disciplinary board in attorney misconduct cases.

e. The attorney settlement agent's prior disciplinary record and prior record of violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter shall be made available to the disciplinary board during the sanction stage of a hearing. The prior record of violations of Chapter 27.3 or this chapter may be made available to Bar subcommittees, district committees, the disciplinary board or a three-judge circuit court prior to the imposition of any sanction for attorney misconduct.

f. If the attorney settlement agent is found to have violated Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter, the attorney settlement agent may be subject to the following penalties, at the disciplinary board's discretion:

(1) A penalty not exceeding $5,000 for each violation;

(2) Revocation or suspension of the attorney settlement agent's registration; and

(3) Any other sanction available to the disciplinary board in attorney disciplinary proceedings under the rules of the Virginia Supreme Court, including, but not limited to, revocation or suspension of the attorney settlement agent's license to practice law.

6. The disciplinary board shall assess costs in accordance with the same rules and procedures that apply to the imposition of costs in attorney misconduct cases.

7. All matters and proceedings pertaining to alleged violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter are public. Related attorney misconduct cases shall be heard by the disciplinary board together with alleged violations of Chapter 27.3 or this chapter. Any related disability issues shall be heard by the disciplinary board separately.

8. The Clerk of the Disciplinary System of the Bar shall maintain files and records pertaining to ended cases involving alleged violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter. The clerk shall follow the same file destruction policies that are utilized in attorney misconduct cases.

9. The Bar may proceed against an attorney settlement agent for alleged violations of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter notwithstanding that the attorney settlement agent has resigned from the practice of law, surrendered his license to practice law in the Commonwealth of Virginia or had his license to practice law in the Commonwealth of Virginia revoked.

10. An appeal from an order of the disciplinary board imposing sanctions under Chapter 27.3 (§ 55-525.16 et seq.) of Title 55 of the Code of Virginia or this chapter shall be conducted in accordance with the provisions of Rules of Court, Part Six, Section IV, Paragraph 13 pertaining to an appeal of an order of the disciplinary board imposing sanctions upon findings of attorney misconduct.

NOTICE: The following forms used in administering the regulation were filed by the agency. The forms are not being published; however, online users of this issue of the Virginia Register of Regulations may click on the name of a form with a hyperlink to access it. The forms are also available from the agency contact or may be viewed at the Office of the Registrar of Regulations, General Assembly Building, 2nd Floor, Richmond, Virginia 23219.

15 Va. Admin. Code § 5-80-50

Derived from Virginia Register Volume 16, Issue 20, eff. May 24, 2000; amended, Virginia Register Volume 19, Issue 17, eff. April 11, 2003; Volume 24, Issue 23, eff. July 1, 2008; Amended, Virginia Register Volume 32, Issue 17, eff. 3/25/2016.

Statutory Authority: § 55-525.30 of the Code of Virginia.