Doe Law Firm v. Richardson

371 S.C. 14, 636 S.E.2d 866 (2006)

 

RULE:

The Supreme Court of South Carolina has identified four steps in a residential real estate closing that involve the practice of law: 1) The title search and preparation of title documents for the lender and subsequent preparation of related documents is the practice of law which must be performed or supervised by an attorney. 2) A lender may prepare legal documents for use in financing or refinancing a real property loan so long as an independent attorney reviews them and makes any corrections necessary to ensure their compliance with law. 3) Real estate closings and mortgage loan closings should be conducted only under an attorney's supervision. The supervising attorney may represent both the lender and the borrower after full disclosure and with each party's consent. 4) The recording of documents is the "final phase" of the real estate loan process and must be done under the supervision of an attorney. 

FACTS:

A law firm brought an action against the disciplinary counsel and attorney general seeking a determination of whether certain real estate activities constituted the practice of law. Particularly, whether the disbursement of loan proceeds in conjunction with a residential refinancing or credit line transaction was the practice of law.

ISSUE:

Is the disbursement of loan proceeds in conjunction with a residential refinancing or credit line transaction the practice of law?

ANSWER:

Yes

CONCLUSION:

The Supreme Court of South Carolina held that the disbursement of funds in the context of a residential real estate loan closing could not have been and should not have been separated from the process as a whole. Accordingly, the disbursement of the funds was required to have been supervised by an attorney. The court did not specify the form that supervision must take, nor did it require that the funds pass through the supervising attorney's trust account. Rather, the court held that an attorney's obligation to both his clients if he represented the buyer and the lender, and to his individual client if he represented only one party, included overseeing this step of the closing process.

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