Virginia; Washington, D.C.; and Maryland are all subject to real estate laws and practices — each with a different take on taxes, contracts, land uses, and many other smaller nuances that can affect your next move. Unlike most parts of the country, our area (the DMV) is comprised of three autonomous states only separated by a few short bridges and small stretches of highway. It is not uncommon that I visit Washington, D.C.; Maryland; and Virginia all in the same day for work; however, I’ll concede copious amounts of traffic and regular metro delays can make even short travel an arduous task, but I digress. Despite the seeming similarities between the three states, there are a number of profound differences as they relate to the real estate transaction that are worth discussing. After consulting real estate law expert Rob Rothstein, vice president of Paragon Title in Bethesda, it was clear that the loan disbursement and recordation laws in Virginia were a good place to start because of the potential impact they can have on buyers and sellers moving to or from Virginia. This process also regularly impacts sellers and buyers in neighboring D.C. and Maryland, due to the intra-area moves we see on a regular basis.

Here’s what Rob Rothstein and Paragon Title had to say:

“In Virginia, title companies are generally required to record the Deed in the land records prior to disbursement of funds. That means that until the Deed is recorded, the seller is unable to receive the proceeds of sale. Most often, recording takes place on the first business day following settlement, but it is possible that it take up to two business days to complete the recording process. Owners who are selling Virginia property to purchase in another jurisdiction should be mindful of the delayed disbursement of their proceeds when scheduling their purchase transaction.”

My thoughts:

With many people in our area scheduling coinciding settlements (buying and selling a house at the same time, while trying to avoid a “double move”), it is obvious that Virginia buyers and sellers moving within the state, or to neighboring Maryland or Washington, D.C., can run into problems quickly if they do not account for the disbursement delay. The short solution is to plan ahead if you are dealing in Virginia. If you are buying and selling a house at the same time, give yourself a few days buffer when selecting your purchase close date to allow the deed to record. This can be accomplished a few ways, but in my experience setting up some type of “rent back” where you (the seller) settle but continue to live in the property for an agreed upon period of time as a tenant. This can be a great strategy for avoiding the costly double move (meaning you have to store your belongings for a few days while you live in a hotel or other temporary housing) while you wait for the deed to record on your sale, and proceeds to disburse so you are able to complete the purchase side and move.

Rob Rothstein with Paragon Title discussing Maryland and Washington, D.C., settlements:

“Different from Virginia, in Maryland and D.C., disbursement is able to occur after settlement and prior to recordation. Accordingly, a seller may be able to receive their proceeds immediately after settlement while the title company continues to work through the post-closing recording process.”

Takeaway:

As you can see, Maryland and D.C. settlements allow for funds to immediately disburse before the ink dries on the closing statement because the deed does not have to be recorded prior to the loan being funded. Theoretically, this gives sellers and buyers in Maryland and D.C. a logistical advantage over Virginia, just in this one way. With that said, each state has their own laws and procedures when it comes to the real estate transaction, so having a real estate professional and title company (like Paragon Title in Bethesda) who are familiar with the differences is critical if you’re planning to move from one state to another, even if that means you’re staying in the DMV. Though I’ve only focused on one key difference, there are many others to consider so get the facts about your state laws, prepare, and proceed with confidence!

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