State and local coverage.
The settlement of a residential real estate transaction is governed by overlapping rules — federal, state, county, municipal, and in some places special-district. The Alliance's infrastructure is designed to operate across all of them. This page describes how.
Two roles, separately tracked.
The Alliance's contract framework distinguishes two roles that are sometimes performed by the same person, depending on the state.
- Smart-contract author. The licensed attorney who authors and adopts the base contract under which the transaction proceeds. This is the role established by Principle IV of the Alliance's charter. The author is named on the contract; the author's signature is recorded on the network as a permanent attestation of authorship.
- Closing custodian. The licensed entity that holds funds in trust, executes the disbursements specified by the contract, and files the recording documents. In some states this is an attorney; in others it is a title company; in others it is an independent escrow company.
The Alliance's infrastructure tracks these as distinct signature events. In states where the same individual performs both roles, the same signing identity may sign both. In states where the roles are separate, two different signatures appear on the contract record. The contract template is the same in either case; only the rule pack that selects the closing custodian role differs.
Five state categories.
States are grouped by closing-custody custom into five categories. The Alliance's settlement workflow operates in all of them.
- Category I
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Attorney-required at closing.
An attorney must conduct or supervise the closing; title companies cannot close on their own. Funds are held in the attorney's regulated trust account. Commonly cited: GA, SC, NC, MA, CT, DE, WV, VT, AL, parts of MS.
- Category II
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Attorney-required for specific acts.
An attorney must perform certain functions — title opinion, deed preparation, document review — but the closing itself can be conducted at a title or escrow company. Commonly cited: NY, NJ (where buyer's attorney is near-universal in practice), RI, ME, KY, ND.
- Category III
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Title-company-led.
A title company conducts the closing; attorneys are optional and engaged ad hoc. Funds are held in the title company's regulated escrow account. Commonly cited: TX, TN, IL, OH, PA, IN, MO, KS, OK, MD, DC, AR, MI, WI, MN, IA, NE, SD, NH.
- Category IV
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Escrow-company-led.
An independent escrow company holds funds and conducts the closing under state escrow license; title insurance is provided separately. Commonly cited: CA, AZ, NV, OR, WA, ID, MT, WY, UT, CO, HI, AK.
- Category V
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Hybrid or split-by-region.
Practice varies by county or transaction type. Commonly cited: FL (title companies common, attorneys also close), LA (civil-law notary system), VA (attorney common but not strictly required).
Closing-custody rules drift. State bar opinions, recent litigation, and county-by-county exceptions occur regularly. The Alliance's per-jurisdiction rule pack is reviewed and updated by the founding member or AOREP standards staff responsible for the territory; the contract author bears final responsibility for confirmation against current authority before signing.
Below the state — county, city, and special districts.
State category is the coarsest layer of the rule structure. A real residential closing is also subject to:
- Federal rules. Closing-disclosure timing, fair-housing protected-class language, foreign-seller withholding under FIRPTA, and other matters that apply uniformly across jurisdictions.
- State rules. Disclosures specific to the state — natural hazard disclosures, agency relationship disclosures, lead-paint disclosures beyond federal — and state-level seller withholding regimes for non-resident sellers.
- County rules. County transfer taxes (which vary widely from county to county), recording fee schedules, soil and septic and well report requirements, plat and survey filing rules.
- Municipal rules. City transfer taxes (such as the New York City mansion tax, the San Francisco real-property transfer tax, the Chicago real-estate transfer tax), point-of-sale inspections (such as Cleveland's POS program or Oakland's RECO ordinance), water-fixture conservation certificates, sewer-lateral inspection ordinances, and similar requirements that apply at the city level only.
- Special-district rules. Mello-Roos community facilities district disclosures, special-assessment district notices, condo conversion ordinances, and other rules that apply to property within the boundaries of specific districts overlapping a city or county.
The Alliance's contract framework accounts for all of these layers through a structured rule engine. Each rule is recorded in the Alliance's standards data with a citation to its statutory or regulatory authority, an effective date and any expiry, the predicate that determines when it applies, and the effect it produces — a clause to insert, a fee to compute, a contingency to require, a workflow step to schedule, or a withholding to compute.
How a contract assembles.
For a given transaction, the contract assembly proceeds in this sequence.
- The property's location resolves to its set of overlapping jurisdictions — country, state, county, municipality, and any special districts within whose boundaries the property sits.
- The rules effective on the contract date for each of those jurisdictions are collected.
- Each rule's predicate is evaluated against the transaction's parameters — price, parties, financing structure, party residency, property age, and the other parameters specified in the Open Settlement Standard.
- Rules that match contribute their effects to the contract — clauses inserted with citations, fees added to the closing statement, contingencies scheduled, withholdings computed, workflow steps queued, signatures required.
- The author attorney reviews the assembled contract, confirms the rule set, and overrides any rule whose application is contested. Overrides are themselves recorded on the network with the attorney's reasoning and signature.
- The signed contract is recorded as the authoritative version. Each rule that fired is recorded as a separate event on the network, citing its authority and the values it computed. The audit trail is reconstructable years later.
Statutory rules versus negotiated terms.
The Alliance's framework distinguishes two kinds of rule that operate on a contract.
Statutory and regulatory rules are imposed by law. They cannot be waived by the parties without an attorney override and a recorded reason. Examples: the closing-disclosure timing under federal regulation, the natural hazard disclosure under state code, the city transfer tax under municipal ordinance.
Negotiated commercial terms are agreed by the parties. They include pricing structure, allocation of closing costs, contingency periods, and the dozens of business decisions that vary by transaction. The framework supports both, on the same engine, but they live in separately curated tables and bear different legal weight.
This distinction matters because the Alliance does not propose to waive consumer protection rules in pursuit of efficiency. It proposes to apply them deterministically and surface them to the parties' attorneys for review before signing — making the rule application visible rather than implicit.
How the Alliance addresses state custom.
The role of attorneys within the Alliance, the role of node operators across territorial categories, and the technical operation of the rule engine are described in the corresponding sections of this site.