Bulletin: WV000010

Dear Associates:

All agents and agencies issuing policies on West Virginia properties must be aware of, and comply with, West Virginia law. Following are highlights of the more important provisions:

"No title insurance shall be issued until the title insurance company has obtained a title opinion of an attorney licensed to practice law in West Virginia." (§33-11a-11, West Virginia Code) Issuing a policy based solely on a credit report or a search from a non-attorney is a violation of West Virginia law.

The "attorney shall have conducted or cause to have conducted under the attorney's direct supervision a reasonable examination of the title." (§33-11a-11, West Virginia Code, emphasis added) Contract searchers and paralegals may search titles, but they must be responsible to, and the work must be reviewed and certified by, a licensed West Virginia attorney.

"No contract of insurance...shall be executed, issued or delivered by any insurer unless the contract...is signed or countersigned in writing by a licensed resident agent of the insurer." (§33-12-11, West Virginia Code, emphasis added.) Persons holding a non-resident agent's license may not countersign policies.

"The entire commission...shall be paid directly to the licensed resident agent who countersigns the policy. The countersigning agent may not pay any part of the commission to any person other than a licensed agent." (§33-12-23, West Virginia Code) Kickbacks and premium splitting are strictly prohibited.

Effective July 1, 2003, Agencies may be licensed as insurance providers. Law firms with licensed agents should also license the firm, especially if closings are conducted in the name of the firm. Upon proper licensure of the agency, the agent may assign his or her commission to the agency of which he or she is an employee or owner.

The West Virginia Bar recently issued an opinion in which it reaffirmed that the closing of a real estate transaction is the practice of law, as are all actions associated with the closing. It recognized, however, at least for the present, that the public may be better served by allowing lay persons to perform certain purely ministerial acts in connection with closings, such as completing a HUD-1, and conducting the closing itself, provided the lay person does not offer any legal advice or opinions.

Failure to comply with West Virginia laws may be considered the unauthorized practice of law, and may subject the offender to action by the West Virginia State Bar.