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Does Every State Require a Real Estate Attorney?

by Elliot Crumpley on No Comments

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Closing requirements vary by state. Some, but not all states, require a real estate attorney.

Closing requirements vary by state. Some, but not all states, require a real estate attorney.

Finding the perfect home and community, while time consuming, exciting, and stressful all at once, is also replete with unexpected costs. Appraisal fees, inspections, and mortgage application fees are just a few of the costs of purchasing a home before factoring in hotels, food, and flights if you’re from out of the area.

In some states, you will have to add one more expense: an attorney.

Of course, having a real estate attorney mediate and review the home buying process is typically a prudent decision. They are, after all, hired to ensure that the buyer and their family are protected from fraudulent claims, predatory loans, or other situations that could make buying your dream home a nightmare. Some states prize having an attorney present so highly that they restrict the power of non-attorneys during the home buying process and some even require that one be present during the closing of a home. These are called attorney states.

Here’s an example of what some states require as far as attorney and non-attorney restrictions at real estate closings:

Alabama

The Yellowhammer State allows non-attorneys to conduct closings yet are restricted in other processes of the home closing process. Non-attorneys (this is usually a catch-all phrase for paralegals, attorney’s assistants, and others involved in the home buying process like title companies) can prepare title abstracts and issue title insurance, but cannot prepare the deeds or other legal documents through which either party can be legally binding.  This also includes giving legal advice or explaining legal documents that are required to be drafted by a licensed attorney.

Delaware

Since a Delaware Supreme Court decision in 2000, non-attorneys are not authorized to conduct a real estate settlement, thereby requiring an attorney be present at closing. Delaware law dictates that attorneys must determine the proper legal description of the property – consistent with the deed and the mortgage – and explain to the borrower the terms of the conglomerate of real estate legal documents: the note, mortgage, Planned Unit Development Rider, the Truth-in-Lending Disclosure, and the first payment letter.

Georgia

Georgia is a popular retirement destination, so active adults and retirees looking to purchase a home in this southern state should know that they require an attorney to be present at closing. Attorneys must also prepare all legal instruments granting legal rights and can determine the validity of titles to real or personal property.

In Georgia, the scope of a non-attorney’s power is restricted to mostly clerical work: examining records and preparing abstracts of title only after it has been reviewed and certified for accuracy.

Massachusetts

The Bay State places a high value on the presence and participation of attorneys in real estate closings. Not only must the attorney be present during closing, but must be actively participating before and during the closing process. Notaries are banned from conducting closings, as are attorneys whose only function is to be present at closing, having no previous knowledge of the contract. Attorneys are also required to analyze the title, draft the deeds, and conduct the valid transfer of property.

Non-attorneys are allowed to title abstracts, title insurance, and perform other administrative functions. This law went into effect in 2011, after Massachusetts attorneys filed a suit against out-of-state attorneys who were attempting to close on properties using witness or notary closings.

New York

In New York, both parties must have attorneys present at closing. The Empire State has some stringent requirements on what functions a non-attorney can perform, thanks to a 2009 ruling by a New York Appellate Court.  They are not allowed to receive direct or indirect compensation for preparing deeds, mortgages, assignments, discharges, leases or any instrument that affects real estate. Furthermore, the ruling stated that even if an attorney reviews and approves the work of a non-attorney, said attorney must have supervisory authority and be involved in the day-to-day operations of the firm for that work to be valid.

North Carolina

A non-attorney in North Carolina has a little more power and the attorney a little more flexibility when it comes to closing. Although a non-attorney cannot officially handle real estate closings, an attorney is not required to be present. While non-attorneys do not have the authorization to furnish opinions as to title of property, its legal status, or a party’s legal rights and obligations, they can present and identify the documents necessary to complete a real estate closing and receive and disburse the closing funds. In other words, the attorney does not have to be physically present, but their non-attorney representative is not allowed to dispense any legal guidance or counsel.

South Carolina

Just next door, the rules are quite different. South Carolina places the attorney square in the center of real estate closings. Attorneys have to conduct and be present at real estate closings. Even after the attorney reviews and approves all necessary documents, the South Carolina Supreme Court considers it a violation if anyone other than the attorney assigned to the transaction is physically present or is dispensing legal advice at the time of closing.

For more detailed information on all 50 states, check out this state-by-state real estate closing guide.

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