THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, October 17, 1996 TAG: 9610170007
SECTION: FRONT PAGE: A18 EDITION: FINAL
TYPE: Editorial
LENGTH: 59 lines
The Bar Council of the Virginia State Bar - to which any lawyer must belong to practice law in the commonwealth - assembles in Roanoke today. The Council will consider approving, disapproving or modifying a proposal by the Bar's Unauthorized Practice of Law Committee to forbid residential-real-estate closings by nonlawyers. The Bar Council should reject the proposal.
The Bar Council's general counsel says a lawyer monopoly of residential closings would ill-serve the public. The U.S. Justice Department shares that view. So does Virginia Attorney General James S. Gilmore III.
More than 60,000 closings on sales of residential real estate take place in Virginia each year - in lawyers' offices, in the offices of title-insurance companies and agents, in banks.
Virginia's real-estate lawyers want to monopolize the residential-closing business. They are proceeding on two fronts to achieve their objective - through the Unauthorized Practice of Law Committee and Bar Council of the Virginia State Bar and in the General Assembly. Hope they fail in both arenas.
A lawyer monopoly of closings would be tolerable if no one but lawyers could perform the closing chore competently and with integrity. The evidence is that lawyers are not essential to the residential-closing process.
Thousands of nonlawyer closings are conducted every week. The public gains in time and money when lawyers and nonlawyers compete for the business. Virginians would lose if only lawyers conducted closings.
At the typical residential-real-estate closing, the seller conveys a property deed to a buyer in exchange for a check or, on occasion, cash. Usually the buyer has had to borrow money from a savings and loan, bank or other lender to pay for the property, so the buyer usually signs a note and a deed of trust held by the lender. The buyer pays the closing cost, customarily ranging between $125 and $400, and the cost of title insurance.
Closings should be tidy, orderly and crisp. But trained and experienced nonlawyers (``lay'' settlement agents) can and do run them as professionally as lawyers.
The real-estate lawyers pushing to monopolize the residential-closing business argue that lawyer-conducted closings would be in the best interest of buyers, sellers and lenders. They cite problems that have arisen from some lay settlement agents' handling of closings. They are silent on problems that have arisen from some real-estate lawyers' closings, as in the case of the Northern Virginia attorney sentenced last week to 51 months in federal prison for laundering money, defrauding banks and pocketing money from settlements. His crimes, according to a Washington Post report, ``cost dozens of unsuspecting home sellers and lenders nearly $5 million. . . .''
Because the real-estate lawyers' pleas are without merit, they should be decisively rejected. But, yes, problems of varying severity occur in a minuscule percentage of residential closings. The remedy is sensible state regulation.
Virginia is among the states without reasonable regulation designed to protect the public from malfeasance, misfeasance and nonfeasance by real-estate lawyers and lay settlement agents. Because Virginia is a fast-growing state, the General Assembly should move promptly to legislate appropriate oversight.
KEYWORDS: REAL ESTATE CLOSINGS by CNB