Tuesday, May 03, 2011

SJC clarifies "unauthorized practice of law"

The Supreme Judicial Court recently released an advisory opinion on Real Estate Bar Association v national Real Estate Information Services. REBA initially sued NREIS over the latter's involvement in real estate closings, arguing that NREIS was conducting the unauthorized practice of law. The case maneuvered its way to the US Court of Appeals which then requested the SJC to clear up what portions of conveyancing constituted the practice of law in Massachusetts. Like most cases, the decision (SJC-10744) is lengthy and will take several readings to digest. In the meantime, here are some quotes from the opinion which was authored by Justice Botsford:

"Title examinations and the preparation of title abstracts generally do not constitute the practice of law."

"Providing opinions or advice regarding marketability of title . . . would constitute the practice of law."

"Drafting and preparing documents for others, including documents with legal implications, does not automatically constitute the practice of law."

"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."

"preparation of settlement statements and other mortgage-related forms . . . does not constitute the practice of law."

"Neither reviewing documents to ensure valid execution nor delivering documents to the appropriate registry of deeds for recording constitutes the practice of law."

"Disbursing mortgage funds does not in and of itself qualify as the practice of law."

"The issuance of insurance policies generally does not constitute the practice of law in Massachusetts."

"A lawyer is a necessary participant at the closing to direct the proper transfer of title and consideration and to document the transaction, thereby protecting the private legal interests at stake as well as the public interest in the continued integrity and reliability of the real property recording and registration systems."

"A post-closing 'rundown' of title to ensure that no encumbrances have been placed on the property prior to recording may constitute the practice of law as part of an over-all determination of marketability of title."

While the SJC opinion is packed with interesting and useful verbiage such as that repeated above, the court makes clear that the absence of key evidence in the record upon which it based its decision prevented the court from giving a clear yes or no answer to this question. I'm not sure what the next step will be, but we'll revisit this case in the coming days.

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