Grab RSS FeedBy…Kiley Black
The following is a summary of the ruling from the Massachusetts Supreme Judicial Court in the case of Real Estate Bar
Association (REBA) v. National Estate Information Services (NREIS). The net effect of the Court’s ruling is to reaffirm Massachusetts real estate attorneys’ necessary involvement with all residential real estate transactions.
This case is between Massachusetts real estate attorneys vs. out of state non-attorney settlement service providers who are attempting to perform “witness or notary” closings here in Massachusetts.
Here is a quick analysis of ruling:
• Massachusetts attorneys must be present for closings and take an active role in transaction both before and after the closing. The court requires “not only the presence but the participation of an attorney.” This is what Massachusetts real estate attorneys have been fighting about for consumers in the face of out of state settlement companies who have tried to conduct notary or witness only closings.
• No “robo-attorneys” allowed. The court went one step further here by ruling that not only are notaries banned from conducting closings, but the closing lawyer cannot be what I like to call a “robo-attorney.” A lot of these out of state settlement companies hire unemployed, newly minted attorneys right out of law school who get a call to preside over a closing they know nothing about for $100 or less. The court commented that “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. We do not consider this to be an appropriate course to follow.”
• Analyzing title and rendering an opinion of clear and marketable title must be conducted by attorneys. Certifying good, clear and marketable title is the fundamental function of the real estate attorney in Massachusetts, and required by law for purchase transactions.
• Attorneys are required to draft deeds. The court held “because deeds pertaining to real property directly affect significant legal rights and obligations, the drafting for others of deeds to real property constitutes the practice of law in Massachusetts.”
• Attorneys must bring about the transaction. The court also ruled that only licensed real estate attorneys can bring about a valid transfer of the property at the closing. This includes ensuring that the deed and mortgage are properly recorded; that the exchange of funds is properly made and that prior mortgages and liens are properly paid off and discharged.
• Title abstracts, title insurance and other administrative functions are properly delegated to non-attorneys. The court also recognized, consistent with modern practice,that many functions in the real estate transaction don’t have to be performed by an attorney such as: the preparation of title abstracts by title examiners at the registries of deeds, the issuance of title insurance policies, and the preparation of closing documents and the HUD Settlement Statement. Real estate attorneys typically use title examiners and paralegals with lower fees to perform these clerical functions, saving the consumer money.
Original Article by Richard D. Vetstein – Boston.com/The Boston Globe
