Dugan, McKissick & Longmore, LLC and its affiliated title companies, Blue Crab Title & Escrow, LLC, Bay County Title & Escrow, LLC, Bridgeview Title, LLC and recently formed Park Place Title & Escrow, LLC (the “DML Group”), have received various inquiries regarding the Coronavirus and how the settlement process is going to be impacted, and we would like to take this opportunity to answer some of these questions. We also want our clients, real estate agents, lenders and other third parties to know what to expect in connection with a settlement with the DML Group. Please note that as we receive additional directives from the public agencies and authorities, and additional information is provided to us, the information provided below may change rapidly and dramatically.
Generally, the various governmental authorities are attempting to implement policies which will slow down the spread of the Coronavirus so that the health system is not overwhelmed. These policies are designed to limit direct social interactions so that the virus is not communicated as quickly as would normally be the case. The requirements of “social distancing” creates challenges for the real estate settlement process.
For example, there are specific legal requirements in Maryland which prevent a real estate settlement from being processed in a manner so as to completely avoid all direct face to face contact.
-Some individuals believe that Maryland currently permits remote online notarization (“RON”) and therefore there won’t be any requirement that a notary be physically present when a person signs a deed or deed of trust. This is not the case right now. Until the enabling legislation in Maryland becomes effective, RON is not a viable option for notarizing documents to be recorded in Maryland and the notary must be physically present when an instrument is executed by a party. Additionally, the Maryland Insurance Administration has previously issued specific directives that a notary cannot notarize settlement documents which involve the issuance of title insurance unless the notary is also specifically licensed to provide title insurance. Therefore, individuals providing notary services in connection with the real estate settlement must also be individuals licensed in Maryland to provide title insurance. Therefore, not just any notary can go to a person’s house and notarize documents.
-People believe that all documents can be “e-recorded” meaning that the documents can be signed, uploaded and then electronically filed with the Land Records. Although e-recordings allows certain documents to uploaded and then electronically recorded, e-recording is not available for all instruments and the originals of some instruments still have to be physically recorded.
The settlement process is further complicated due to the fact that deeds and other instruments that are being recorded often must be first “stamped” by various agencies before they can be recorded in the Land Records, including the local County Treasurer and the Maryland State Department of Assessments and Taxation (“SDAT”). The Land Records as well as each of these agencies are subject to differing jurisdictional oversight and therefore have different policies regarding how they handle the Coronavirus, and to what extent they are open. Since an instrument to be recorded may require approval by all such agencies, the closure of one agency can interrupt the recording process.
Additionally, as part of the settlement process, information must be obtained from various agencies and third parties in order to conduct a settlement. The title to the property must be searched in the land records. Judgment searches must be conducted on the individuals to a transaction. The status of the payment of real estate taxes, agricultural transfer tax, homeowners association dues, water and sewer fees etc., must all be confirmed. Not all information is available on-line and some information must be manually confirmed with the applicable agency or third party. As closures occur some of this information may not be readily available which can also affect the settlement process.
Therefore under current Maryland law, the settlement process will by necessity require face to face interactions and the closure of, or restrictions placed upon the operations of, various agencies and other businesses due to the Coronavirus can impact the settlement process.
As closures and restrictions have been imposed, we in turn have implemented workarounds where needed to allow the settlement process to continue so as to serve our clients. At the same time we have tried to balance the need to serve our clients by ensuring settlement are occurring with our civic duty to assist in limiting the spread of the Coronavirus, as well as our desire to try to protect our staff and the people we deal with from the spread of infection. Accordingly, we have adopted the following policies and procedures:
- 1. We have been in direct contact with the different agencies and our abstractors to develop the necessary “work arounds” to allow the real estate settlement process to continue and will continue to do so. The local land records and treasurers offices have been extremely accommodating and are working very hard to come up with solutions to address our needs as a settlement provider. For instance, although the Land Records are subject to directives limiting access to the general public, the Land Records have installed lockboxes where settlement documents are deposited, which is then emptied by the Land Records periodically and once documents are recorded they are then placed back in the drop box for pick up. We in turn have individuals who are physically dropping off these documents and retrieving them from the lockbox. Similarly, even though the ability to conduct “title search rundowns” are now restricted, we have received specific authorization from our title insurance underwriters that we can continue to conduct settlements provided specific affidavit forms are signed at closing by the seller and/or borrower confirming the status of the title and the affidavits are now part of our closing packages.
- 2. The attorneys at Dugan, McKissick & Longmore, LLC are monitoring the situation and are available to answer specific Coronavirus related questions. Specific attorneys are tracking state law changes and other attorneys are tracking federal law changes, including the proposed federal Families First Coronavirus Response Act. We have administrative staff tasked with tracking federal and state recommended health and safety guidelines designed to deal with the Coronavirus and we are implementing the guidelines as needed. The attorneys and staff of the DML Group have been designated into teams to provide flexibility dealing with issues which may arise with respect to the Coronavirus and to provide cross coverage in the event people are out.
- 3. With respect to our general business operations, we have implemented the following policies:
- A. We have twenty eight staff people so in order to implement social distancing within our offices, we have physically redistributed our staff amongst our various locations and many of our staff on any given day are now teleworking and are no longer physically in an office.
- B. Our staff have been reminded of our sick leave policy which prohibits any person who exhibits any signs of infection or sickness (regardless whether Coronavirus related) from coming into work. The DML Group provides for substantial paid sick leave which will be in addition to any leave under the proposed federal law and we encourage our staff to take the sick leave as needed.
- C. The frequency of office and building cleanings has been increased at our main office where most of our settlements and client meetings occur. We have a local contractor who will institute decontamination procedures according to CDC guidelines in the event an instance of Coronavirus is found to occur in our office or building.
- D. We have hand sanitizers throughout our offices and our staff has been directed to use them, as well as to frequently wash their hands. Common areas, such as the reception areas are regularly being wiped down with disinfectant.
- E. All of our staff have been briefed on recommended health and safety protocols. We will not be shaking hands with clients and we encourage other parties not to do so.
- F. To the extent that client face to face meetings are not necessary, we are utilizing phone conferences and have systems in place for videoconferencing if needed to avoid clients having to come into offices.
- 2. Specifically with respect to real estate settlements, we have instituted the following processes:
- A. We intend to continue to provide settlement services as long as we are allowed to do so. We will continue to work with the various agencies and third parties to try to implement work arounds as needed to allow the settlement process to continue. Obviously, we will be subject to any applicable governmental shut down orders as any other business which could result in an interruption to the settlement process.
- B. All of the individuals who conduct settlements for the DML Group are authorized notaries and are also licensed title insurance providers which limits the number of people who have to meet face to face with the clients to conduct the settlements.
- C. We are encouraging that only those individuals who need to sign documents physically attend settlement. It is customary for the real estate agents and in some instances loan officers to attend settlement. As a practical matter, the real estate agents and loan officers have completed their work or the settlement wouldn’t be occurring and we are therefore asking if possible that they not attend settlement unless they feel they have to. We will wire commission checks to agents for no charge or place the checks out front for pick up immediately after closing. We often hand deliver checks to real estate agents and our courier will continue to do this, but at some point we may have to limit courier activities.
- D. When a person arrives for a settlement they will be asked if they have any flu like symptoms. If an individual has a fever they will not be allowed in the settlement. If individuals have a cough, even though it just may be allergies, they may be placed in a separate conference room or office to separately sign their documents. Individuals entering the office will be encouraged to use the available hand sanitizers.
- E. There may be individuals who have specific concerns about conducting a settlement with multiple people present. We have multiple licensed closers and depending on scheduling and the volume of settlements that day, we will try to accommodate the individuals by having them sign document separately from other people. Please notify us in advance of closing, if that is the desire of a person.
- F. All pens and eyeglasses have been removed from the conference rooms. All such items, as well as the settlement tables and chairs, are wiped down with a disinfectant before and after closings. Any pens or eyeglasses provided at the time of closing to client are being wiped down with a disinfectant before and after use.
- G. We are still conducting travel closings and you should expect our travel closers to be engaging in activities designed to limit the spread of the virus, such as not shaking hands. Any pens provided by the travel closer will have been disinfected prior to use and the travel closer will have used hand sanitizer prior to conducting the closing. At some point travel closings may be curtailed or otherwise limited.
As stated earlier all of the procedures are designed to try to minimize the impact of the Coronavirus on the settlement process while still adhering to the general health and safety protocols being implemented by the public authorities. Please understand that the situation is fluid and the policies and our procedures may be changed suddenly without advance notice. We appreciate everyone’s patience, understanding and cooperation during the pandemic.
*** Update to above post
-The Chief Judge of the Maryland Court of Appeals has issued an Administrative Order requiring the Clerks of the Circuit Courts of the State of Maryland to process promptly all properly filed instruments that are required to be recorded in the Land Records Departments. The order also specifically directs that electronic signatures on documents in compliance with the Commercial Law Articles of the Annotated Code shall be accepted by the Land Records. We are set up to file instruments, such as deeds and deeds of trust electronically, and are familiar with the legal requirements pursuant to the Commercial Law Article, so that in the event that our couriers are no longer able to manually take the documents to the Land Records, we will still be able to operate and record deeds and deeds of trust electronically. However, note that lenders still require “wet” signatures on the promissory notes, so even though we have specific authorization to have documents signed electronically and the capability to file documents electronically, we still may need wet signatures on certain loan documents. This will have to be handled on a case by case basis with the applicable lender.
-Although the Maryland Remote Online Notarization (RON) law is not scheduled to go into effect until October, 2020 our title insurance underwriters have specifically given us authorization to use RON in specific circumstances. Note that this authorization is limited, however, and one of the attorneys will have to look at the specific transaction to see RON is available. Also note that a bill has been introduced at the federal level which would permit immediate nationwide use of RON with minimum standards. We are tracking that bill. It therefore may be possible to have documents remotely notarized depending on the transaction.
-These changes may make it possible to conduct the entire real estate transaction remotely without face to face contact. If we can remotely notarize documents then we would be able to E-mail documents to parties to a real estate transaction, have them print them out and sign them and then have them remotely notarized, or we might be able to use a different electronic signature methodology. The client would then return the documents electronically and we in turn would be able to file the documents electronically. This would allow the continuation of the real estate settlement process if we are prevented from having face to face contact with our clients.