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An effort to allow nonlawyers to preside over real estate closings in Georgia met with skepticism from state Supreme Court justices during a hearing on Monday. U.S Department of Justice lawyer John P. Fonte, representing the Federal Trade Commission, was less than two minutes into his argument that laypeople should be able to handle closings in Georgia when Justice P. Harris Hines interrupted him. “Are you saying that the preparation of a deed is not the practice of law?” he said. “No, Your Honor, we’re not,” Fonte said. The issue, Fonte said, is not whether managing a closing ceremony is technically the practice of law. “Either way, it doesn’t really matter,” he said. “The overriding issue here is that the Georgia consumer will benefit from lay closings.” But exactly what the state should require of those who preside over closings and what arrangement will benefit the public are precisely the issues that real estate lawyers, mortgage companies and title companies have been warring over since late last year. The hearing prompted a flurry of amicus briefs — not only from the Justice Department, but also from title companies, individual real estate brokers and notaries who hope to benefit from allowing nonlawyers to handle closings. The court held a hearing in response to a request for discretionary review of an opinion rendered by the State Bar of Georgia’s standing committee on the Unlicensed Practice of Law earlier this year. During a three-hour hearing in March, the committee considered the question: “Is the preparation and execution of a deed of conveyance (including, but not limited to, a warranty deed, limited warranty deed, quitclaim deed, security deed and deed to secure debt) considered the unlicensed practice of aw if someone other than a duly licensed Georgia attorney prepares or facilitates the execution of said deed(s) for the benefit of the seller, borrower and lender?” The committee’s opinion was that O.C.G.A. � 15-19-50 bars nonlawyers from conveyancing property, preparing legal documents and rendering opinions about a title’s validity. During the March hearing, Georgia lawyers argued that allowing nonlawyers to handle closings alone would expose home buyers to fraud. However, title companies, real estate brokers and representatives from some banks contended that nonlawyer closings give home buyers greater freedom in the mortgage process and would save buyers money. Both sides made much the same arguments on Monday. Harold T. Daniel Jr., chairman of the UPL Standing Committee of the State Bar, made it through his argument with little questioning from the justices. Daniel pointed out that a closing is not simply signing a bunch of documents that appear out of nowhere. It’s the entire series of events transferring title to land from one party to another. “This does not occur in a vacuum,” he said. “Someone has to prepare the conveyance deeds before the closing event takes place.” And someone, he said, has to be there to answer questions about what the documents say will happen when the buyer signs them. “For many members of the public, the time of their greatest need for protection is when buying or selling real estate,” he said. Daniel pointed out that some out-of-state companies are conducting “witness-only” closings, in which the company retains a Georgia lawyer who had nothing to do with preparing the documents and can’t answer any questions about them to be present during the signing of the conveyance of title. The justices reserved the most pointed questioning for Fonte. “Are you saying that we should just determine what is in the public interest and not what is or is not the practice of law?” Hines asked. Fonte replied that the court should do what it surely is trying to do: protect the interest of consumers while ensuring they’re not vulnerable to fraud. Having a closing lawyer at the table is an unnecessary restriction, Fonte said, and does not necessarily benefit the buyer, because the lawyer almost always is paid for by the lender. Chief Justice Norman S. Fletcher then interrupted to point out that lawyers have duties in addition to those they owe their clients. Who pays, he said, is not always the best indicator of an attorney’s duties, he said. Lawyers, Fletcher added, have to ensure that the documents constitute good conveyance of title and offer their legal opinion that such is the case. If they do not, he said, there are consequences. A lawyer who presided over a closing that defrauded the buyer, he said, would have some trouble on his hands. “He would, I hope, have someone to answer to,” he said. Justice George H. Carley then interrupted to ask Fonte, “What standard of skill, care and diligence is required of a lay closer as opposed to an attorney?” Fonte replied that it varies from state to state, but the specifics weren’t important. “Whatever the skill level is, it is getting the job done in this country,” he said. The Title Appraisal Vendor Management Association’s lawyer, Edward F. Glynn, of Venable in Washington, followed Fonte in asking for the court to sanction lay closings. He pointed out that there is a national market for the mortgage business, both in setting up mortgages and in selling them on the secondary market. “If you’re going to burden interstate commerce, you’ve got to have a good reason for doing it,” he said. The closing procedure is highly standardized, Glynn said. It does not allow a lot of independent toying with the documents. “This is not something where you sit down and start out with a blank sheet of paper,” he said. Again, Carley seemed skeptical. Aren’t there changes that need to be made to the documents during closing? he asked. “If that’s the case, and there’s no attorney present, then what happens?” asked the judge. Repeating an argument Fonte made earlier, Glynn replied that the closing would have to stop until the buyer could get legal advice. Many states already allow state-supervised and licensed title companies to handle closings. And the Federal Trade Commission recently lobbied in favor of lifting the bar’s monopoly on handling closings, sending a letter to the North Carolina bar to encourage it to lift its ban on nonlawyers’ handling real estate transactions. In Georgia the issue came to the forefront when the Georgia Real Estate Closing Attorneys Association sued Omni Title Services Inc. in Fulton Superior Court. GRECAA accused Omni of using nonlawyer employees to preside over closings. Omni denied the accusation. Judge Doris L. Downs dismissed the case, saying that GRECAA lacked standing to sue. On Monday, the State Bar’s general counsel, William P. Smith III, told the justices that not adopting the committee’s opinion would generate “many questions and much confusion as to how real estate law is to be practiced in the state of Georgia.” For Fonte and Glynn’s argument to be valid, the court would have to agree that handling a closing is not the practice of law, Smith said. On the other hand, he added, the converse also would be true. “If it is the practice of law then the only way to protect the public is to allow only lawyers to do it,” he said. The person present at closing, he said, is going to have to make assurances to the buyer about what the documents say. How, he asked, can a person do that without rendering a legal opinion about the document? “I don’t think you can get around that,” he said.

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