Are ALTA Practices the Best Practices for Your Firm?

Toni Schwahn, WHTCPAby Toni Schwahn, CPA, CFET
schwahn@whtcpa.com

Many private industries in the U.S. have a history of self-regulation. One particular example is the film industry and the ratings of their films for the viewing audience. The real estate settlement and title industry have finally joined the many other self-regulated industries and issued the Title Insurance and Settlement Best Practices for use by closing attorneys and title companies.

The American Land Title Association’s (ALTA) primary objective for developing the Title Insurance and Settlement Best Practices is to protect both lenders and consumers while providing ample assurance that those who have adopted these policies and procedures are at a lower risk for land title difficulties and non-compliance with associated regulations. Most closing attorneys and title companies are in compliance with the best practices, but find themselves without the proper documentation needed to support their compliance.

How does the certification process work? Certification of compliance can be done by three different methods:

  1. Underwriter Certification – is completed by a title insurance underwriter. The underwriter is usually willing to help their clients come into compliance, but can typically be unwilling to give actual written verification of compliance.
  2. Self-Certification – this method is a written statement by the settlement agent that states they are familiar with the best practices and they are adhering to them.
  3. Third – Party Certification – is issued by an independent third party, typically an accounting firm. The accounting firm will issue a written report certifying that the settlement agent is in compliance with the best practices.

While adherence to these practices can enhance a firm’s market share and distinguish them from their competitors, settlement agents who receive a certification by a CPA are deemed to possess a higher level of credibility related to their compliance, and usually exhibit integrity that others can rely on. This can provide an advantage over other competition.

More About the Author

Toni Schwahn leads the legal services niche for Whaley Hammonds Tomasello, P.C. Her CPA firm is located in suburban Atlanta.

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