Beware Lawyerless Closings  

 

The North Carolina State Bar recently announced two related opinions affecting real estate closings in this state. The opinions:
• permit a lawyer’s properly supervised non-lawyer assistant to oversee execution of the closing documents and disburse proceeds even if the attorney is not physically present; and
• allow non-lawyers not acting under an attorney’s supervision to present and identify closing documents, collect signatures and disburse closing funds.

These opinions do not give real estate licensees (or other non-lawyers) free reign to conduct real estate closings themselves!

On the contrary, attorneys will still be required to handle the bulk of a real estate closing, including all functions identified as the “practice of law.” According to the Bar, these functions include:
• abstracting the title opinion;
• explaining the legal status of title to real estate, alternate forms of taking title, or the effect of anything found in the chain of title;
• advising the parties about their rights or responsibilities in connection with the promissory note including the rights and obligations it creates, the effect of a prepayment penalty, the parties’ right to recission and the rights of a lender;
• drafting legal documents for a party;
• explaining or recommending a course of action to a party that requires any legal judgment or that affects the party’s legal rights and responsibilities; and
• attempting to resolve disputes that will affect a party’s legal rights.

Licensees may continue to assist parties in filling in the blanks on preprinted contract forms, but must leave all legal services in the hands of an attorney. In light of the importance of a real estate purchase or sale to most consumers, licensees should strongly encourage their clients and customers to seek the assistance of an attorney for closing.