Mass. High Court Upholds Role of Lawyers Before, During and After Real Estate Closings
Massachusetts’ top court has partly sided with lawyers in a turf battle between the real-estate bar and a Pittsburgh mortgage service company.
In a ruling on Monday, the Massachusetts Supreme Judicial Court said ethics rules require “substantive participation” by lawyers in real-estate closings, the Boston Globe reports. Just showing up for the closing is not enough, the court said in an opinion by Justice Margot Botsford.
The court ruled on questions presented by the Boston-based 1st U.S. Circuit Court of Appeals in a suit against National Real Estate Information Services Inc., which provides title and legal services to mortgage lenders across the nation. The suit by the Real Estate Bar Association for Massachusetts had claimed some of the company’s services constituted the unauthorized practice of law.
Ed Bloom, president of the Real Estate Bar Association for Massachusetts, alleged in an interview with the Globe that NREIS performs “witness closings” where a lawyer shows up, but doesn’t have any real knowledge about the real estate sale.
The Supreme Judicial Court said it didn’t have enough information to decide the first certified question: whether the company’s hiring of local lawyers to attend real estate closings violates state laws governing the process. But Botsford emphasized that a lawyer’s ethical responsibilities “require actions not only at the closing but before and after it as well.”
“Many of the activities that necessarily are included in conducting a closing constitute the practice of law and the person performing them must be an attorney,” the court said. “Implicit in what we have just stated is our belief that the closing attorney must play a meaningful role in connection with the conveyancing transaction that the closing is intended to finalize. If the attorney’s only function is to be present at the closing, to hand legal documents that the attorney may never have seen before to the parties for signature, and to witness the signatures, there would be little need for the attorney to be at the closing at all.”
The lender’s lawyer has a responsibility to ensure that the seller or borrower has marketable title and to ensure a valid transfer of interests, the opinion said. The court also cautioned that a third party that hires a lawyer to act on behalf of a client cannot control the lawyer’s actions.
The court partly sided with NREIS on the second certified question, however, saying some of its services—including title searches, the preparation of settlement statements and the recording of deeds—don’t constitute the unauthorized practice of law.
The National Law Journal also has coverage.
