Bulletin: DE000006

Dear Associates:

On September 2006, the Supreme Court of the State of Delaware issued an Order which further clarifies the prior ruling under Mid-Atlantic Settlement Services, Inc., et al (2000 WL 97-5062 Del.Supr..)  The Mid-Atlantic ruling held that real estate transactions constitute the practice of law and, therefore, it is necessary for settlements to be held by a Delaware attorney.  The case did not, however, directly address the supervision of the settlement funds.

In the Matter of a Member of the Bar of the Supreme Court of Delaware, Number 313, 2006, the Supreme Court published a Board of Professional Conduct ruling involving a matter wherein the Attorney used a third party settlement company for the disbursement of the settlement funds.

According to the Board of Professional Conduct, residential real estate transactions require that:

1) the Attorney explain the transaction to the extent reasonably necessary for the client to make an Informed Decision; and

2) the Attorney provides, as early as practicable, a written statement for the client's signature which confirms the client's knowledge of his/her absolute right to be represented by separate counsel; and

Rule 1.15 requires funds from all real estate transactions, must be held in the Attorney's Escrow Account.

The Board of Professional Responsibility reasoned that when a Delaware Attorney delegates the settlement and funds disbursement responsibility to a non-lawyer, there is no way the Attorney can supervise the disbursement of funds and comply with the requirements, accountability, and oversight embodied in Rule 1.15 and 1.15(A).

Please contact a Stewart Delaware underwriter if you have any questions concerning this or any other topic for which you need assistance.  For on-line viewing of this and other bulletins, log onto http://vuwriter.com