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Texas law allows a title company and attorney to split title fees if both parties work on the transaction.
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Hiring an outside title fee attorney can be very beneficial for buyers and lenders.
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The attorney can often be a one-stop shop to smooth out any details that arise during closing and help make sure the purchase is completed.
When I tell people this, it naturally leads to them asking me, “What the [heck] is a P-22 fee attorney? And why do I want that?” It’s a fair question. The answer I usually give is, “Its me. And because I’m nice. And fun.” But I reckon that’s a little unsatisfactory to most folks. So in this week’s article, I’m going to talk about what a P-22 fee attorney is and why it’s a good idea to hire one.
What is a P-22 Attorney
In Texas, a P-22 Attorney refers to Texas Department of Insurance Procedural Rule P-22. Under that rule, a title insurance company cannot make any payment to someone for helping with closing if that person is not an employee of that title company, unless that person or company is:
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A title company;
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A title insurance agent; or
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A lawyer.
The person with whom the title company shares fees must also help perform the closing work. This can include examining title, closing the transaction, etc.
Therefore, a result of this rule, attorneys and title companies will often work together to close transactions and split the fees from that.
Why Hire a P-22 Attorney
Now that we know what a P-22 attorney is … what’s the point? Why hire one?
I’m glad I asked. First, to get it out of the way early – a P-22 attorney does not cost the buyer or seller any additional fees that the title company isn’t already charging. As you probably know, title insurance fees in Texas are set by the State. And having a P-22 attorney involved does not change that. It’s the same cost it would be if you just had a title company.
In addition, a P-22 attorney can be very helpful in getting a deal closed. For example, an attorney can help in the following ways:
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Talks your language – a P-22 attorney has to follow the rules set up by the TDI and can only make the accommodations she is allowed to make under the law. But often a P-22 attorney also works on deals where she represents the buyer. As a result, if there is a conflict, she may understand the issue the buyer or lender is trying to resolve. And can work with the title company and the underwriter to get that issue resolved.
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One stop shop – When a P-22 attorney is involved, he or she can be the sole face of the title company/closer. Whenever an issue arises, you will know who to deal with. If there is an issue, the attorney is your contact and can help solve the problem. It often makes for a simpler, smoother transaction.
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A true closer – A good P-22 attorney understands how important it is to all sides to get a deal closed. Too often, a title company may see a request from a buyer or seller that is not possible under the TDI rules and just say, “No.” A good lawyer – a good closer – needs to be able to say, “Well we can’t do that, but lets figure out what we can do to get this deal closed.”
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Relationship – And that brings me to the final point – when having a P-22 attorney assist with closings, you can develop a relationship with that attorney. He can understand your needs and work directly with the title company to see if the insurance policy can meet those needs.
Overall, a P-22 attorney can be very helpful to a successful and smooth transaction. He or she can bridge the gap that sometimes arises between an underwriter and a buyer or lender to help ensure a purchase gets closed. And for that, a P-22 attorney can be worth his or her weight in gold.
If you are closing a deal and would like more information about fee attorneys, please call Bukowski Law Firm at 512-614-0335.
