THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, September 21, 1996 TAG: 9609210522
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: 48 lines
The Justice Department and Federal Trade Commission staff said Friday that a proposed Virginia State Bar rule preventing nonlawyers from performing real estate closings would be anti-competitive and hurt consumers.
``Without competition for these services, Virginians are likely to see their real estate closing costs go up,'' said Anne K. Bingaman, assistant attorney general in the Antitrust Division.
The Justice Department and Federal Trade Commission letter comes a month before a vote by the State Bar Council on the proposed rule.
At stake is a turf battle between lawyers and new competitors - such as title companies and banks - over settlement fees, which typically run between $350 and $600 per transaction.
Attorneys argue that homebuyers put themselves at risk when buying property without legal representation. Lay settlement agents contend that they can do it cheaper and that consumers making routine purchases should not have to hire an attorney.
Most real estate closings in Northern Virginia are handled by lay firms, and the practice is growing more common in Hampton Roads.
In their letter, the Justice Department and Federal Trade Commission concede that consumers who hire attorneys ``may get better service and representation'' at closing.
``But, this is not a reason to eliminate lay closing services as an alternative to consumers who wish to utilize them,'' the letter said.
Instead of banning lay settlement companies, the federal agencies recommended that buyers who forgo lawyers be given written notice of the risk involved.
Charles Lollar, a Norfolk attorney who heads the Virginia Real Estate Attorney League, replied that a written notice would be no more effective than warning labels on cigarette packs.
``Half-measures are not sufficient, and only an attorney retained by the party can exercise the independent judgment necessary to protect the consumer,'' Lollar said.
The State Bar Council vote - an authority granted by the General Assembly - will take place Oct. 17 and 18 in Roanoke.
``We've had more comment on this than on anything the Bar has ever done,'' said James McCauley, the Bar's ethics counsel.
If the Bar Council approves the rule, the Virginia Supreme Court would have to affirm the matter before it became law.
KEYWORDS: REAL ESTATE CLOSINGS LAY FIRMS VIRGINIA STATE BAR
by CNB