state of rhode island providence plantations · 2019-02-13 · 12/7/20189:24am...
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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
SUPREME COURT
1N RE: DANIEL D. BALKUN AND No. SU-2018-162-M.p, :3 33'
BALKUN TITLE & CLOSING, INC. (UPLC 2017-1)
DJ
On Report OfThe Unauthorized Practice OfLaw Committee
BRIEF OF AMICI CURIAE RHODE ISLAND BANKERS ASSOCIATION,RHODE ISLAND MORTGAGE BANKERS ASSOCIATION, RHODE ISLANDASSOCIATION OF REALTORS®, INC, COOPERATIVE CREDIT UNION
ASSOCIATION, EQUITY NATIONAL TITLE AND CLOSING SERVICES, INC.AND LINCOLN ABSTRACT & SETTLEMENT SERVICES, LLC
Robert K. Taylor (#65 14)
Paul M. Kessimian (#7127)
PARTRIDGE SNOW & HAHN LLP
40 Westminster Street
Suite 1100
Providence, RI 02903
(401) 861-8200
(401) 861-8210 FAXrtaylor@,psh.com
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TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... i
STATEMENT OF INTEREST ....................................................................................................... 1
SUMMARY OF THE ARGUMENT .............................................................................................. 3
ARGUMENT ................................................................................................................................... 5
A. The Court Should Not Prohibit Non-Lawyers From Performing
Real Estate Closings And Other Routine, Standardized Activities
That Do Not Require Legal Skill And Judgment................................................................. 5
B. The Court Should Not Prohibit Non—Lawyers From Acting In
Ways That The Legislature Has Determined Fill A Public Need ...................................... 10
1. Rhode Island Statutes Provide That The Closing, Title, AndSettlement Services At Issue Are Not The Unauthorized
Practice Of Law ..................................................................................................... 10
2. The Committee’s Disregard Of Rhode Island Statutory LawRuns Counter To The Committee’s Reasoning And RhodeIsland Precedent Concerning The Unauthorized Practice Of Law ........................ 14
a. Applied T0 Rhode Island, The Logic OfREBAResults In A Conclusion Opposite To The Committee’s .......................... 15
b. This Conclusion, Moreover, Is Reinforced By This
Court’s Own Precedents ............................................................................ 16
C. The Committee Fails To Distinguish Between The Several
Types Of Real Estate Closings, Many Of Which Do NotInvolve Residential Sales ................................................................................................... 17
D. The Court Should Not Declare That Powers Of Attorney AndResidency Affidavits Can Be Prepared Only By An Attorney ..........................................23
E. The Committee’s Recommendations Do Not Address Rule 1.7
Of The Rules Of Professional Conduct ............................................................................24
CONCLUSION .............................................................................................................................. 26
APPENDIX ............................................................................................................................ APPOl
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TABLE OF AUTHORITIES
Rhode Island Cases
In re Town ofLittZe Compton, 37 A.3d 85 (R.I. 2012) .......................... 5, 10, 14, 16, 17, 20, 21, 24
R.I. Bar Ass ’n v. Auto. Servs. Ass’n,
179 A. 139, 144 (R.I. 1935) ............................................................................................................. 5
State v. McDonald, 157 A.3d 1080 (R.I. 2017) ............................................................................ 13
Unauthorized Practice ofLaw Comm. v. State, Dep ’t. 0f Workers’ Comp,543 A.2d 662 (R.I. 1988) ........................................................................................... 5, 9, 10, 14, 16
Other Cases
Countrywide Home Loans v. Ky. Bar Ass ’n,
113 S.W.3d 105 (Ky. 2003) ................................................................................................. 6, 22, 26
Dressel v. Ameribank, 664 N.W.2d 151 (Mich. 2003) ....................................................................7
1n re First Escrow, Ina, 840 S.W.2d 839 (Mo. 1992) ................................................................... 25
In re Opinion N0. 26 ofComm. 0n Unauthorized Practice ofLaw,654 A.2d 1344 (NJ. 1995) ..................................................................................................... 5, 6, 21
King v. First Capital Fin. Servs. Corp,828 N.E.2d 1155 (Ill. 2005) ......................................................................................................... 7, 8
LaBrum v. Commonwealth Title C0. ofPhiladelphia,
358 Pa. 239, 56 A.2d 246 (1948) ..................................................................................................... 8
Real Estate Bar Ass ’n v. Nat ’l Real Estate Info. Servs.,
946 N.E.2d 665 (Mass. 201 1) ........................................................................................... 13, 15, 17
Ticor Title Ins. C0. v. Smith,
794 S.W.2d 734 (Tenn. App. 1990) ................................................................................................ 8
Statutes or Rules
12 C.F.R. §§ 1024.1 et seq. ............................................................................................................ 21
12 C.F.R §§ 1026.1 el seq. .............................................................................................................21
H. 5630, 2015 Gen. Assemb., Jan. Sess. (R.I. 2015) ..................................................................... 11
H. 5566, 2009 Gen. Assemb., Jan. Sess. (R.I. 2000) ..................................................................... 11
H. 5936, 2003 Gen. Assemb., Jan. Sess. (R.I. 2003) ..................................................................... 11
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H. 7462, 2002 Gen. Assemb., Jan. Sess. (R.I. 2002) ..................................................................... 11
H. 6001, 2001 Gen. Assemb., Jan. Sess. (R.I. 2001) ..................................................................... 11
M.G.L. ch. 93 § 70 .........................................................................................................................50
P.L. 1917, ch. 1494, § 2 ................................................................................................................. 11
P.L. 1935, ch. 2190, §1 ................................................................................................................. 11
R.I. Gen. Laws § 5-20.5-4 .............................................................................................................. 23
R.I. Gen. Laws § 5-20.5-5 .............................................................................................................. 23
R.I. Gen. Laws § 5-20.5-25 ............................................................................................................ 23
R.I. Gen. Laws § 5-20.8-2 .............................................................................................................. 21
R.I. Gen. Laws§ 11-27-16 ........................................................................................... 10, 14, 15, 17
R.I. Gen. Laws § 11-27-16(a) ........................................................................................................ 11
R.I. Gen. Laws§ 11-27-16(a)(1) ............................................................................................. 1 1, 17
R.I. Gen. Laws § 11-27-16(a)(7) ..................................................................................................... 9
R.I. Gen. Laws § 18-16-2 ............................................................................................................... 23
R.I. Gen. Laws§ 19-14-1(13) ...................................................................................... 12, 14, 15, 17
R.I. Gen. Laws § 27-2.4-3 .............................................................................................................. 22
R.I. Gen. Laws § 27-2.4-8 .............................................................................................................. 22
R.I. Gen. Laws § 27-24-21 ............................................................................................................ 22
R.I. Gen. Laws § 27-2.6-3(17) ................................................................................................. 12, 15
R.I. Gen. Laws § 27-2.6-3(17)(ii)(B) ....................................................................................... 15, 17
R.I. Gen. Laws § 27-2.6-3(18) ....................................................................................................... 14
R.I. Gen. Laws § 27-2.6-3(18)(ii)(B) ............................................................................................. 12
R.I. Gen. Laws § 27-2.6-3(18)(ii)(C) ................................................................................. 12, 15, 17
R.I. Gen. Laws § 27-2.6-7 .............................................................................................................. 22
R.I. Gen. Laws § 27-2.6-13 ............................................................................................................22
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R.I. Rule of Prof. Cond. 1.7, Comment 8 ......................................................................................25
R.I. Rule of Prof. Cond. 1.7 ...........................................................................................................25
R.I. Rule of Prof. Cond. 7.4 ........................................................................................................... 12
15 U.S.C. § 1635 ............................................................................................................................21
W. Va. Code § 30-2-5 ...................................................................................................................... 8
Other Authorities
Andrew G. Pizor et al., Mortgage Lending
36-37, 46-47 (2d ed. 2014) ...................................................................................................... 17, 18
Deborah L. Rhode & Lucy Buford Ricca, Protecting the Proféssion 0r the Public?
Rethinking Unauthorized Practice Enforcement,
82 Fordham L. Rev. 2587 (2014) ............................................................................................ 13, 14
In re Daniel S. Balkun, UPLC—2017-1,
(R.I. Unauthorized Practice of Law Comm. June 7, 2018) ........................................................ 9, 17
In re William E. Paplauskas, Jr., UPLC 2015-6,
(R.I. Unauthorized Practice of Law Comm. May 9, 201 8) ........................................................ 9, 17
In re SouthCoast Title & Escrow, UPLC-2017—7,V
(R.I. Unauthorized Practice 0f Law Comm. June 7, 2018) .................................................. 9, 17, 25
Joyce Palomar, The War Between Attorneys and Lay Conveyancers —
Empirical Evidence Says “Cease Fire! ”,
31 Conn. L. Rev. 423 (1999) ................................................................................................... 13, 23
Justin Pritchard, How Home Equity Loans Work: Pros and Cons,
The Balance (last updated Oct. 30, 2018) ...................................................................................... 19
Leslie C. Levin, The Monopoly Myth and Other Tales About the Superiority ofLawyers,
82 Fordham L. Rev. 2611 (2014) ................................................................................................... 13
Office of the Comptroller of the Currency,
Residential Real Estate 3-5 (2017) .................................................................................... 18, 19, 21
Miscellaneous
State of Rhode Island — Division of Taxation Seller’s Residency Affidavit ................................23
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STATEMENT OF INTEREST
This brief is submitted on behalf of organizations and companies interested in
preserving the proper, competitive, and functioning market for loan, title, and settlement services
in the State of Rhode Island. The decision by the Unauthorized Practice of Law Committee (the
“Committee”) unnecessarily, and perhaps unintentionally (given the very limited record below),
threatens long-standing practices that benefit consumers and businesses alike. Amici submit this
brief to assist the Court in understanding the manifold negative implications of the Committee’s
decision.
The Rhode Island Bankers Association (“RIBA”) is a membership organization of
banks and trust companies doing business in Rhode Island. RIBA works with bank regulators
and elected officials to communicate the banking industry’s perspective on legislative and
regulatory issues and to promote policies that enhance customer access to low cost, high quality
banking products. Rhode Island banks collectively hold over $2 billion in residential mortgages.
Accordingly, RIBA’s members will be directly affected by any changes to established closing
and settlement practices that may result from this proceeding, and have a strong interest in
offering the Court insight into the ways such changes would affect RIBA’S members and their
customers.
The mission of the Rhode Island Mortgage Bankers Association, Inc. (“RIMBA”)
is to promote and sustain responsible home lending in Rhode Island. RIMBA serves as an active
and leading voice 0n legislative and regulatory matters affecting home lending in Rhode Island.
RIMBA’S 86 individual and organizational members include banks, mortgage companies, credit
unions, title insurance companies, mortgage insurance companies, and closing and escrow
companies. Accordingly, RIMBA’S members will be directly affected by, and have a strong
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interest in educating the Court about, the consequences of a determination that real estate
closings are the practice of law.
The Rhode Island Association ofREALTORS®, Inc. (“RIAR”) is a 501(c)(6) not-
for-profit professional organization for real estate licensees with 5,257 members. RIAR
advocates for policies that advance the right to own, use, and transfer real property. RIAR and
its members have an interest in the development of standards for efficient, effective, and ethical
real estate business practices, including practices in the early stages of a real estate transaction
that may be affected by the outcome of this proceeding. RIAR is participating in this amicus
brief t0 protect consumer choice throughout all stages of a real estate transaction from beginning
to end.
The Cooperative Credit Union Association (“CCUA”) represents nearly 200
credit unions in Rhode Island, Massachusetts, New Hampshire, and Delaware. CCUA’s
members strive to provide consumers with outstanding financial services, including
competitively priced residential mortgages. The Committee’s recommendations, if adopted,
would directly affect the operations of CCUA’s members in Rhode Island.
Equity National Title & Closing Services, Inc. (“Equity National”) is a leading
provider of title and settlement services throughout the United States. Headquartered in
Providence, Rhode Island, Equity National provides service and support to lenders (both
commercial and residential), homeowners and real estate professionals, and has over 28 years of
experience in title and settlement services. Equity National will be directly affected by any
changes to established closing and settlement practices that may result from this proceeding, and
has a strong interest in educating the Court about the already extensive regulation of title and
settlement services in Rhode Island and otherjurisdictions.
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Lincoln Abstract & Settlement Services, LLC (“Lincoln Abstract”) is a Rhode
Island based title and closing agency, with a national footprint. Lincoln Abstract provides
settlement services to local, regional and national banks, lenders and mortgage originators.
Lincoln Abstract has been a provider of title and closing services in Rhode Island for many years
and the majority of its title and closing services is for properties located in Rhode Island and
Massachusetts. Lincoln Abstract will be directly affected by any changes to established closing
and settlement practices that may result from this proceeding, and has a strong interest in
educating the Court about the existing regulation of title and settlement services that fully
protects the public interest.
SUMMARY OF THE ARGUMENT
The Committee’s recommendations, if accepted, are likely to lead to a substantial
increase in consumer costs associated with the thousands of real estate transactions that occur in
Rhode Island every year. Based on publicly available data on closing costs, Amici estimate that
the Committee’s recommendations would cost Rhode Islanders as a whole over $7,000,000 each
year. While this significant cost increase would doubtless benefit Rhode Island attorneys, there
is no evidence that taking many millions of dollars from the pockets of Rhode Islanders for
services that many choose not t0 pay for would serve a compelling public need. The
Committee’s recommendations are akin to mandating the hiring of Olympic swimmers as
lifeguards at the neighborhood pool — highly skilled people, but very expensive and not
necessary to protect the swimming public.
This Court’s primary consideration in regulating the practice of law is the public
interest. Notably, the elected representatives of the people of Rhode Island, many ofwhom are
themselves attorneys, long ago concluded that it is in the public interest to exclude the activities
of title insurance companies from the definition of the practice of law. The Committee’s
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recommendations fail t0 give the Legislature’s long-standing assessment of the public interest
the substantial weight that it deserves. This Court should not upend established practices by
declaring that preparing title commitments and standardized transactional documents is the
unauthorized practice of law.
Mortgage transactions in particular are highly regulated by both the state and
federal governments. They are standardized and trigger numerous statutory consumer
protections and disclosure requirements. Mortgagors may not be cognizant of all the issues that
an attorney might discern in the loan documents at a closing, but they are certainly aware that the
mortgage involves a sizable sum of money and significant legal obligations. Mortgagors attend
the closing prepared to move forward despite this knowledge. By the time of the closing, the
standardized loan documents have been prepared, are not negotiable, and are merely presented
for signature. Mortgagors should not be compelled to pay for an attorney to be present at an
event that is in most cases a formality.
This Court should not prohibit closing and settlement practices that are commonly
used in Rhode Island (and many other states), and have been for years without any noticeable
detriment to the public. Such a ban would impose significant new costs on Rhode Islanders, and
is not justified by the sparse record below. The public interest in limiting particular activities to
licensed attorneys is small when, as with most closings, those activities are routine and d0 not
require a high degree of legal skill and judgment. The Court, therefore, should reject the
Committee’s recommendations.
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ARGUMENT
A. The Court Should Not Prohibit Non-Lawyers From Performing Real Estate
Closings And Other Routine, Standardized Activities That D0 Not Require
Legal Skill And Judgment.
The practice of law “cannot be easily defined.” Unauthorized Practice ofLaw
Comm. v. State, Dep ’t ofWorkers’ Comp, 543 A.2d 662, 665 (R.I. 1988). An important factor,
however, is the extent to which the activity in question involves the exercise of legal skill and
judgment. Transactional work has been held to be the practice of law when it “require[s] in
many aspects a high degree of legal skill, a wide experience with men and affairs, and great
capacity for adaptation to difficult and complex situations.” R.I. Bar Ass ’n v. Auto. Servs. Ass ’n,
179 A. 139, 144 (R.I. 1935) (quoting In re Opinion ofthe Justices t0 the Senate (Mass), 194
N.E. 3 13, 3 17 (Mass. 1935)). In contrast, licensed attorneys axe not needed to perform work that
is routine, repetitive, or that calls for expertise that is held equally by non-lawyers. See In re
Town ofLittle Compton, 37 A.3d 85, 92 (R.I. 2012) (noting that non-lawyers handling labor
arbitrations are likely well-versed in the “law of the shop”); Dep ’t. 0f Workers’ Comp, 543 A.2d
at 666 (upholding statute authorizing non-attomey employee assistants to perform “relatively
simple and repetitive functions” in connection with workers’ compensation hearings).
Many jurisdictions have decided that residential real estate closings and related
functions are routine and can be performed competently by non-lawyers without harming the
public. Even in some of the states that do require an attorney at the closing, the requirement is
limited to buyer/seller transactions.
For example, over twenty years ago, the Supreme Court ofNew Jersey held that
“the public interest does not require that the parties [to a residential real estate transaction] be
deprived of the right to choose to proceed without a lawyer.” In re Opinion N0. 26 ofComm. 0n
Unauthorized Practice ofLaw, 654 A.2d 1344, 1345 (NJ. 1995). The New Jersey court reached
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this conclusion based on an extensive evidentiary record of divergent settlement practices
between the northern and southern parts of the state. As the court trenchantly observed about the
practice in South Jersey, where non-attorney closings were routine:
It would take a volume to describe each and every risk to which
the seller and buyer have exposed themselves without adequate
knowledge. But it takes a very short sentence to describe what
apparently occurs: the deal closes, satisfactory to buyer and seller
in practically all cases, satisfactory both at the closing and
thereafter.
1d. at 135 1. The court pointed out that at every step of a real estate transaction, from the signing
of the purchase contract through the settlement, a “full understanding” of the risks would require
the advice of counsel. Id. at 1352. Nevertheless, the court acknowledged that the public had not
suffered any discernible harm from being allowed to buy and sell real estate without an attorney:
While the risks 0f non-representation are many and serious, the
record contains little proof of actual damage to either buyer or t
seller. Moreover, the record does not contain proof that, in the
aggregate, the damage that has occurred in South Jersey exceeds
that experienced elsewhere. In this case, the absence of proof is
particularly impressive, for the dispute between the realtors and the
bar is of long duration, with the parties and their counsel singularly
able and highly motivated t0 supply such proof as may exist. The
South Jersey practice also appears to save money. For the record
demonstrates what is obvious, that sellers and buyers without
counsel save counsel fees.
Id. at 1346.
The Supreme Court 0f Kentucky also had an extensive evidentiary record in front
of it when it considered whether~to ban non-attorneys from handling real estate closings. The
court rej ected the Kentucky Bar Association’s argument that the mere “potential for legal
questions and issues to arise at the closing” required the presence of an attorney. Countrywide
Home Loans v. Ky. Bar Ass ’n, 113 S.W.3d 105, 122 (Ky. 2003). Based 0n the evidence, the
court found that closings were ministerial:
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We believe the changes in the secondary market have had little
effect on the essential nature of the closing, itself, except to the
extent that those changes have standardized and proliferated the
documents at closing. Because most of the closing documents are
prepared by the lender and legal issues are almost always resolved
prior to the closing, the closing agent’s role at the closing table is
to present the documents to the parties, to instruct the parties where
to sign, and to disburse funds.
Id. at 1 19. The court noted that “in those few instances where legal questions do arise, lay
closing agents are properly trained to answer only if they can do so by reading from the
document itself without providing any additional explanation. If they cannot do so, they are
trained to halt the closing so that the parties may seek legal counsel.” Id. at 119-120.
The Michigan Supreme Court similarly has emphasized that mortgages and deeds
“have become ‘so standardized that to complete them for usual transactions requires only
ordinary intelligence rather than legal training.”’ Dressel v. Ameribank, 664 N.W.2d 151, 156-
57 (Mich. 2003) (internal citations omitted). “To insist that only a lawyer can draft such
documents would impede numerous commercial transactions without protecting the public, i.e.,
would not further the purpose 0f restricting the practice of law to trained and licensed attorneys.”
Id.
The Illinois Supreme Court has held that the preparation of notes and mortgages
by non-lawyers is permitted When done by a party to the transaction for its own benefit. This
“pro se exception” applies when “the party preparing the legal documents does so for his or her
own benefit in a transaction to which the preparer is a party.” King v. First Capital Fin. Servs.
Corp, 828 N.E.2d 1155, 1163 (111. 2005). In King, there was no dispute that “the lenders
prepared the notes and mortgages for their own use in transactions to which they were panics.”
Id. There was also no dispute that the lenders did not “h[o]ld themselves out as providing legal
services in connection With the loan transactions.” Id. The Illinois Supreme Court rejected the
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argument that the lenders had engaged in the unauthorized practice 0f law merely because they
charged document preparation fees. Id. at 1173-1 174.
The Pennsylvania Supreme Court long ago held that title insurance companies are
not engaged in the unauthorized practice of law. Instead, the acts necessary to issue a title
insurance policy are part 0f the title company’s ordinary course of business:
In order to decide whether defendant will insure a title, defendant
must first examine and pass upon the instrument or instruments
evidencing the transfer. Its charter authorizes all steps necessary
for the enjoyment of its corporate franchise. If examination of the
instrument discloses defects that the insurer thinks must be
corrected before the title can be insured, it must of course be
redrawn in the interest of both insurer and insured. Drawing the
instrument correctly in the first place is no more unauthorized
practice of law than examining or approving it after it has been
drawn, or returning it for correction after it has been found t0 have
been erroneously drawn.
LaBrum v. Commonwealth Title C0. ofPhiladelphia, 358 Pa. 239, 244, 56 A.2d 246, 248 (1948);
see id. at 56 A.2d 246, 250 (“There is in the present case no holding out as lawyer; the legal
work complained of is not general but merely incidental t0 the title insurance which defendant’s
charter authorizes.”).
Other jurisdictions have likewise determined that title insurance company
practices are not the unauthorized practice of law. See Ticor Title Ins. C0. v. Smith, 794 S.W.2d
734, 738 (Tenn. App. 1990) (“It is not necessary t0 be a lawyer in order t0 ascertain 0r review
the status of the title t0 real property for the purpose of issuing a title insurance policy. . . . The
statute is clear that non-attomeys may engage in the title insurance business without engaging in
the practice of law.”); W. Va. Code § 30-2-5 (“This section shall not apply . . . to a corporation
or voluntary association lawfully engaged in examining and insuring the titles to real property”).
The Committee takes the position that “conducting a real estate closing is the
practice of law in Rhode Island because a real estate closing is an important transaction with
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monumental legal consequences.“ Defining the practice of law based on the “legal
consequences” casts too wide a net. Id. For example, there are also important legal
consequences that flow from the documents executed at the beginning of a real estate
transaction, such as offers to purchase, purchase and sales agreements, extensions, and addenda,
as well as from leases and other documents that state law currently allows real estate licensees to
prepare. R.I.G.L. § 11-27-16 (a)(7). Likewise, the circumstances surrounding the purchase of an
automobile often involve the review and execution of multiple legal documents and matters of
financing reminiscent of a real estate closing, but it is not the unauthorized practice of law for
auto-dealership personnel t0 walk vehicle buyers through that process. The Committee’s
analysis threatens to undercut other exemptions from the definition of the practice of law, and
pile substantial additional legal fees on Rhode Island consumers, based solely 0n the vague and
infinitely disputable contention that the “legal consequences” of a transaction are such that.
consumers should be deprived of the choice to hire a lawyer 0r not. The appropriate inquiry,
rather, is whether the activity at issue is “relatively simple and repetitive.” See Dep ’t 0f Workers
Comp, 543 A.2d at 666. The closing and settlement services that the Committee found are the
practice of law are routine and repetitive. Non-lawyers have been performing such tasks in
Rhode Island for years and should be permitted to continue to do so.
‘ See In re William E. Paplauskas, Jr., Committee Report dated May 9, 201 8 (“Paplauskas
Report”) at 21; In re SouthCoast Title & Escrow, Committee Report dated June 7, 2018
(“SouthCoast Report”) at 30; In re Daniel S. Balkun and Balkun Title & Closing, Ina,
Committee Report dated June 7, 201 8 (“Balkun Report”) at 47.
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B. The Court Should Not Prohibit Non-Lawvers From Acting In Wavs That TheLegislature Has Determined Fill A Public Need.
1. Rhode Island Statutes Provide That The Closing. Title, And Settlement
Services At Issue Are Not The Unauthorized Practice Of Law.
In addition to considering the degree of legal skill, experience, and adaptability
called for under the circumstances, the Court “must also weigh the public policy interests
involved.” Town ofLittle Compton, 37 A.3d at 92; see also Dep ’t 0f Workers’ Comp, 543 A.2d
at 665 (the practice of law should not be “subject to such rigid and traditional definition as to
ignore the public interest”). On the subj ect of public interest, the elected Legislature’s
determinations are given substantial weight:
[T]he General Assembly has without interference by this court
permitted a great many services that would have come within the
definition of the practice of law to be performed by insurance
adjusters, town clerks, bank employees, certified public
accountants, interstate commerce practitioners, public accountants* * *, as well as employee assistants. The plain fact of the matter
is that each of these exceptions enacted by the Legislature
constituted a response t0 a public need. In each instance the
Legislature determined that the persons authorized to carry out the
permitted activities were qualified to do so.
Dep ’t of Workers’ Comp, 543 A.2d at 664-65 (emphasis added).
In the context of real estate transactions, the General Assembly has long deemed
it to be in the public interest to exclude the activities 0f title insurance companies ffom the
definition of the practice of law. As set forth in R.I. Gen. Laws § 11-27-16,
(a) Nothing in §§ 11-27-2 — 11-27-11 or §§ 11-27-16 — 11-27-
18 [which concern the practice of law] shall be construed to limit ‘
or prevent: I
(1) Any corporation, or its officers or agents, lawfully
engaged in the insuring of titles to real property from
conducting its business, and the drawing of deeds,
mortgages, and other legal instruments in or in connection
with the conduct of the business of the corporation.
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The predecessor to § 1 1-27-1 6(a)(1) was enacted in 1 91 7,2 and revised to its substantially present
form in 1935.3
Further, the General Assembly clearly understood that the title insurance practices
it was permitting under § 11-27-16(a) included not only the “drawing of deeds, mortgages and
other legal instruments,” id., but also determining insurability and handling closings.4 Under the
Rhode Island Title Insurers Act, a “title insurance agent” or “agent” means:
an authorized person, other than a bona fide employee of the title
insurer who, on behalf 0f the title insurer, performs the following
acts, in conjunction with the issuance of a title insurance report or
policy:
(i) Determines insurability and issues title insurance reports 0r
policies, or both, based upon the performance or review of a search
or abstract 0f title; and
(ii) Performs one 0r more of the following functions:
(A) Collects 0r disburses premiums, escrow 0r security
deposits or other funds;
(B) Handles escrows, settlements or closings;
2P.L. 1917, ch. 1494, § 2 (“This section [concerning the unlawful practice of law] shall not
apply . . . to a corporation lawfully engaged in the examination and insuring of titles to real i
property”).
3P.L. 1935, ch. 2190, § 1 provides:
Nothing in this section or the next preceding section [concerning the unlawful
practice of law] shall be construed to limit or prevent: . . . Any corporation or its
officers or agents, lawfully engaged in the insuring of titles to real property from
conducting its business, and the drawing of deeds, mortgages, and other legal
instruments in or in connection with the conduct of the business of such
corporation.
4 The Legislature has also repeatedly and as recently as 2015 declined to enact proposed
revisions to R.I. Gen. Laws § 11-27-2 that would have rendered the title insurance and real estate
closing/settlement services at issue here the “practice of law.” See H. 5630, 2015 Gen. Assemb.,
Jan. Sess. (R.I. 2015); H. 5566, 2009 Gen. Assemb., Jan. Sess. (R.I. 2009); H. S936, 2003 Gen.
Assemb., Jan. Sess. (R.I. 2003); H. 7462, 2002 Gen. Assemb., Jan. Sess. (R.I. 2002); H. 6001,
2001 Gen. Assemb., Jan. Sess. (R.I. 2001).
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(C) Solicits or negotiates title insurance business; or
(D) Records closing documents.
R.I. Gen. Laws § 27-2.6-3(17). The “business of title insurance” is defined as including
“[g]uaranteeing, warranting 0r otherwise insuring the correctness of title searches” and
“[h]andling of escrows, settlements or closings.” Id. § 27-2.6-3(18)(ii)(B) and (C).
The Legislature’s determination that title insurance companies and their agents
are qualified t0 assess insurability and handle loan closings is also reflected in Title 19 ofthe
General Laws concerning “Financial Institutions.” Title 19 defines “loan-closing services” as
“providing title services, including title searches, title examinations, abstract preparation,
insurability determinations, and the issuance of title commitments and title insurance policies,
conducting loan closings, and preparation of loan-closing documents when performed by, or
under the supervision of, a licensed attorney, licensed title agency, or licensed title insurance
company.” R.I. Gen. Laws § 19-14-103) (emphasis added).
The Committee’s recommendation fails to assign the proper weight to the
Legislature’s assessment of the public interest. Instead, the Committee appears to assume that
attorneys are more competent to conduct real estate closings than non-attorneys. This
assumption is not supported by the record, and even if true, does not answer the question
presented here — whether the public interest demands that standardized, repetitive and highly
regulated functions must only be performed by attorneys, at substantial additional cost t0 the
consumer.
Rhode Island does not have a procedure which would allow for a licensed
attorney to hold himself/herself out as a real estate expert certified by the Rhode Island Supreme
Court. See R.I. Rule of Prof. Cond. 7.4. There is no evidence, moreover, that non-attomey
closing specialists and paralegals versed in real estate closings do not have the qualifications to
12
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perform the services they are presently performing. See Joyce Palomar, The War Between
Attorneys and Lay Conveyancers — Empirical Evidence Says “Cease Fire! ”, 31 Conn. L. Rev.
423, 520 (1 999) (“The only clear conclusion . . . is that the evidence does not substantiate the
claim that the public bears a sufficient risk from lay provision of real estate settlement services to
warrant blanket prohibition of those services under the auspices of preventing the unauthorized
practice of law.”); see also Leslie C. Levin, The Monopoly Myth and Other Tales About the
Superiority ofLawyers, 82 Fordham L. Rev. 261 1, 2615 (2014) (“[T]here is little evidence that
lawyers are more effective at providing certain legal services or more ethical than qualified
nonlawyers”). In fact, there is good reason t0 think Ithat requiring lawyers t0 handle all closings
will not necessarily improve consumer protection in comparison to allowing experienced non-
attomey closing specialists t0 perform those services. See, e.g., State v. McDonald, 157 A.3d
1080 (R.I. 201 7) (affirming conviction of real estate attorney for embezzlement of funds
intended to be disbursed to pay off residential mortgage).
A recent academic survey of unauthorized practice of law enforcement concluded
that, as to real estate transactions, “the lines drawn by some courts seem arbitrary at best.”
Deborah L. Rhode & Lucy Buford Ricca, Protecting the Profession 0r the Public? Rethinking
Unauthorized Practice Enforcement, 82 Fordham L. Rev. 2587, 2601 (2014) (discussing Real
Estate Bar Ass ’rz v. Nat ’l Real Estate Info. Servs., 946 N.E.2d 665 (Mass. 201 1) (hereinafter
“REBA”)). The survey also concluded that there was n0 evidence 0f consumer harm to support
most instances of alleged unauthorized practice of law:
Although bar leaders and case doctrine insist that broad
prohibitions on unauthorized practice serve the public, support for
that claim is notable for its absence. Outside a few contexts such
as immigration, foreclosures, and trusts and estates, it is rare for
customers to assert injury, or for suits to be filed by consumer-
protection agencies. As noted earlier, three-quarters of
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jurisdictions reported that fewer than half of their complaints camefrom consumers or clients, and two-thirds of respondents could not
recall a specific case of injury in the last year. Of those who did
identify a case, almost all involved immigration. So too, the vast
maj ority of UPL [unauthorized practice of law] lawsuits filed
against cyber-lawyer products are brought by lawyers or
unauthorized-practice committees and generally settle without
examples of harm.
Id. at 2605 (emphasis added). In light of these realities, the express pronouncements from the
Legislature discussed above, and the long-standing practice of non-lawyers’ role in real estate
transactions in Rhode Island and elsewhere in the United States, the Court should decline to
adopt the Committee’s recommendations.
2. The Committee’s Disregard 0f Rhode Island Statutory Law Runs CounterTo The Committee’s Reasoning And Rhode Island Precedent ConcerningThe Unauthorized Practice Of Law.
The Committee’s failure t0 give proper deference to R.I. Gen. Laws §§ 1 1-27-16,
27-2.6-3(17) and (1 8), and 19-14-1(13) is not only problematic as a matter ofpolicy, but
deficient as a matter of law. The Committee’s legal analysis flies in the face of both REBA, to
which the Committee turned for guidance, and this Court’s precedents. The decision in REBA
and this Court’s rulings indicate that Iong-standing practice in the jurisdiction and statements of
the legislature should guide whether particular conduct is the practice of law. Dep ’t 0f Workers’
Comp. , 543 A.2d at 666 (“we are dealing with a question of first impression and are relying to a
great extent upon the legislative findings”); Town ofLittle Compton, 37 A.3d at 93 (deferring to
“long-standing involvement of nonlawyer union employees at public grievance arbitrations” and
declining to limit that involvement as unlawful practice of law). To that end, the Committee’s
refusal to defer t0 the General Assembly is not only wrong as a practical matter, but a‘legal one.
14
12/7/201 8 9:24 AM
a. Applied To Rhode Island, The Logic Of REBA Results In AConclusion Opposite To The Committee’s.
When it comes to whether the conduct of real estate closings constitutes the
practice 0f law, the Committee acknowledged that there was no uniform opinion among the
states and based its decision, in large part, on the Massachusetts Supreme Judicial Court’s
decision in REBA. That decision turned to what was the “common and long-standing practice in
the Commonwealth” to assess the role 0f attorneys in the settlement of real property conveyances
and what would and would not constitute the unauthorized practice of law:
As a matter of common and long-standing practice in the
Commonwealth, an attorney must be involved in the closing or
settlement of real property conveyances, a fact that the parties here
d0 not dispute. Some States do not require that an attorney
conduct these closings. We decline here to follow their lead and :
overturn our established practice.
REBA, 946 N.E.2d at 684 (internal citations omitted). The REBA court also noted the
Massachusetts legislature’s own determination (through the enactment of M.G.L. ch. 93 § 70 in
1972) that attorneys for the lender in a purchase money first mortgage transaction must certify
title for the mortgagor and mortgagee. Id. at 687 n.46.
Applying REBA’S reasoning here, however, leads to a conclusion completely
contrary to the Committee’s. While acknowledging that in Rhode Island notary closings are
“evidently a common practice throughout the state,” Paplauskas Report at 16, the Committee
summarily and erroneously dismissed the implications of that practice and recommended that it
be overturned. The Committee also brushed aside the clear, contrary statements (and consequentI
longstanding practice) enshrined in law by the General Assembly for decades. See R.I. Gen.{I
Laws §§ 11-27-16, 19-14-1(13), 27-2.6-3(17)(ii)(B) & (18)(ii)(C). Therefore, one need go noVI
further than the logic ofREBA — the very case on which the Committee relied — to conclude that
the Committee was in error.
15
12/7/201 8 9:24 AM '
'
b. This Conclusion, Moreover, Is Reinforced Bv This Court’s OwnPrecedents.
This Court has made clear for over eighty years that the thrust of reserving the
practice of law to duly licensed attorneys is “to ensure that the public welfare will be served and
promoted.” Town ofLittle Compton, 37 A.3d at 85 (internal quotation marks omitted). The
Court’s assessment of the public welfare has been guided by legislative findings, as well as
practice and custom.
For example, in Dep ’t 0f Workers’ Comp. , this Court concluded that the practice
of “employee assistants” aiding employees during informal workers’ compensation hearings did
not constitute the unauthorized practice of law. 543 A.2d at 665-66. In approving such “lay
representation” in “informal hearings” over workers’ compensation issues, this Court relied “t0 a
great extent upon the legislative findings that declare the necessity for an informal prompt
hearing in the event 0f controversy.” Id. at 666.
Likewise, in Town osz'ttle Compton, this Court refrained from declaring
“nonlawyer representation of unions at labor arbitrations” the unauthorized practice of law. See
37 A.3d at 92, 95. Although the Legislature had not expressly deemed this “common practice in
Rhode Island” as outside the practice of law, this Court nonetheless declined t0 disturb the status
quo in recognition of “the long-standing involvement of nonlawyer union employees at public
grievance arbitrations” and the disruptive “impact on all public labor arbitrations throughout this
state” that a contrary decision would entail. See id. at 92-95.
These precedents support rej ecting the Committee’s recommendations. As in
Dep ’t of Workers’ Comp, 543 A.2d at 665-66, the Legislature has weighed in and declared it to
be in the public interest t0 exclude the title insurance and real estate closing/settlement services
subj ect to the Committee’s recommendations from the definition 0f the practice of law. See R.I.
16
12/7/201 8 9:24 AM
Gen Laws. §§ 11-27-16, 19-14-1(13), 27-2.6-3(17)(ii)(B) & (18)(ii)(C). Similarly, like Town 0f
Little Compton, the activities at issue here are “long-standing,” 37 A.3d at 95, and “common
practice in Rhode Island,” id. at 92. Indeed, the grounds for deeming the subject title insurance
and real estate closing/settlement services not the practice of law are even firmer here, because
unlike in Town ofLittle Compton, id. at 94, there are multiple legislative pronouncements
expressly declaring the conduct at issue outside the practice of law. See R.I. Gen Laws. §§ 11-
27-16(a)(1), 19-14-1(13), 27-2.6-3(17)(ii)(B) & (18)(ii)(C).5
C. The Committee Fails To Distinguish Between The Several Tvpes Of Real Estate
Closings, Manv Of Which Do Not Involve Residential Sales.
The Committee’s reports do not define the term “real estate transaction.” While
the reports focus 0n residential purchase transactionsf the ultimate recommendations are much
more generic. For example, the Committee recommends that only an attorney should handle a
“real estate closing,” and describes a “closing” as “where all parties in a real estate conveyancing
transaction come together to transfer their interests.” SouthCoast Report at 30 (quoting REBA,
946 N.E.2d at 684); see also Paplauskas Report at 17; Balkun Report at 47. This potentially
sweeps in not only purchase transactions, but also mortgage refinancings and home equity loans.
From a lender’s point of view, secured real estate loans take many different forms
from purchase money mortgages to refinancings, second mortgages and home equity loans and
lines of credit. Andrew G. Pizor et al., Mortgage Lending 36-37, 46-47 (2d ed. 2014). The
5 In short, common practice and legislation are not extraneous to the legal question of whether
any given conduct constitutes the unauthorized practice of law — those questions go to the heart
of the issue. See Town ofLittle Compton, 37 A.3d at 92-95. Those questions, based on the facts
and the law here, indicate that the Committee’s recommendation is wrong.
6 See SouthCoast Report at 31 (“The Committee recognizes that buying a home is often the
single most significant purchase people make. At the point of a scheduled closing, emotions are
high, time is of the essence, and the average buyer and seller are unaware of the pitfalls that maybe lurking in the shadows.”); Balkun Report at 48 (same); Paplauskas Report at 21 (same).
17
12/7/201 8 9:24 AM
practices and procedures adopted by the lender of secured real estate loans vary considerably.
See id. Traditionally, closed endedxpurchase money secured real estate loans and refinance loans
would be processed through the lender’s mortgage department with ultimate delivery into the
secondary mortgage market;7 whereas the refinance loan, second mortgage loan and home equity
line of credit would, for the most part, be held in the lender’s loan portfolio and administered by
the lender’s consumer loan department. Office of the Comptroller of the Currency, Residential
Real Estate 3-5 (2017) (hereinafter “OCC Handbook”) (“Home equity loan and line underwriting
and processing functions may also be handled by personnel trained in consumer credit functions
and use a consumer loan platform”).8
There are considerable differences in the procedures and risks applicable to each
of these types of loans, with higher standards and the assumption of lower risks applicable to the
purchase money secured loan. See id. at 3-5 (discussing characteristics for residential mortgage
loans which are typically sold on the secondary market, such as “specific underwriting
standards”). Conversely, home equity lines of credit are offered for the most part to customers as
little to no cost consumer loans. See id. at 5-6 (“First, home equity loans and lines of credit
products are typically acquired from existing customers through the bank’s branch locations or
consumer lending activities”). The risk assumptions in these types of loans are more flexible
and thus minimize the need for the traditional title abstract that is required in a purchase money
mortgage. Compare id. at 5-6, 23-24 (discussing home equity credit originations, and noting
“[t]he closing ofhome equity loans and lines is less formal than a mortgage loan closing”) with
7 See generally Pizor et al. at 6-7, 24 (discussing lender’s options to retain loan in portfolio or
sell into secondary market).
8 The OCC Handbook is available at: https://www.occ.gov/publications/publications-bv-
type/comptrollers—handbook/residential-real-estate-lending/pub-c11~1'esidential—real~estate.pdf.
18
12/7/201 8 9:24 AM
id. at 15-21 (discussing mortgage loan originations); see also Justin Pritchard, How Home Equity
Loans Work: Pros and Cons, The Balance, https://www.thebalance.com/home-equitv-loans—m (last updated Oct. 30, 2018) (“[H]ome equity loans are relatively safe loans for banks to
make”). As such, requiring an attorney to close these loans would add considerable cost to the
consumer. See infia at 19-20.
There were over 41 ,000 mortgage transactions in Rhode Island in 2017 where the
mortgage amount exceeded $1,000, according to data collected by the Warren Group.9 The cost
of mandating attorney-only closings can be estimated by comparing the average closing fee in
Massachusetts (where land conveyancing is the practice of law, see REBA) to the average closing
fee in Rhode Island (where such practices are not). Based on closing fee averages collected and
published by a widely-accepted industry source, Bankrate.com, in 2017, the average cost for the
purchaser of a single family home in Massachusetts is $174 higher than in Rhode Island.
Increasing the average cost of the approximately 41,000 Rhode Island mortgage closings by
$174 translates into an additional cost to Rhode Islanders of $7,134,000. If average closing costs
in a larger group of “attorney-only” states mentioned in the Committee’s reports are considered,
the gap is even larger. The data, based again 0n the closing fee averages compiled by
Bankrate.com in 201 7, is set forth in the table below.
9 Established in 1872, the Warren Group collects and compiles data on real estate sales and
ownership throughout New England. A copy of the Warren Group’s findings is at Appendix A.
19
12/7/201 8 9:24 AM
Bankrate.comClosing Costs Data
Model A2‘2tzizzi;::°:;:%°r
Attorney Only CT $686
Attorney and Title Co FL $434
Attorney Only GA $721
Attorney and Title Co ME $580
Attorney Only MA $744
Attorney and Title Co NH $542
Attorney Only NY $947
Attorney Only NC $71 8
Attorney and Title C0 RI $570
Attorney Only SC $723
Attorney and Title Co TX $456
Attorney Only Avg $756.50
Attorney and Title Co Avg $516.10
Difference Avg.
$240. 1 0
Differences state to state
RI to MA $174 higher in MARI to CT $1 16 higher in CTRI to NY $377 higher in NY
This Court has considered the economic effects that its resolution of unauthorized
practice of law questions will have on the public. In Town ofLittle Compton, for example, this
Court considered whether appearing on behalf of a labor union at a labor arbitration proceeding
was the practice of law. 37 A.3d at 86. Even though the union’s lay representative “acted in
ways normally attributed to the practice of law,” the court declined to require that an attorney be
hired. Id. at 94-95. The court noted that “prohibiting this practice and requiring both the labor
1°Attorney, closing, and settlement fee information for all 50 states can be found by following
each state’s respective link in the table appearing on Bankrate.com at: https://www.bankrate.com
/finance/mortgages/closing-costs/united-states.aspx.
20
12/7/201 8 9:24 AM
union and management to retain a lawyer may formalize an arbitration proceeding, delay its
conclusion, and raise the cost for both parties.” Id. at 93. The Court further noted that “[a]ny
decision t0 limit the practice of nonlawyer representation in public labor arbitrations will
undoubtedly have an impact on all public labor arbitrations throughout this state.” Id. at 95.
As in Town ofLittle Compton, the Committee’s recommendation, if adopted, Will
“undoubtedly have an impact” on thousands of real estate transactions throughout the state every
year. Id. As to each individual transaction, the Committee’s recommendation is likely to “delay
its [the transaction’s] conclusion, and raise the cost for both parties.” Id. at 93. See also In re
Opinion N0. 26 ofComm. 0n Unauthorized Practice ofLaw, 654 A.2d at 1346 (“the record
demonstrates what is obvious, that sellers and buyers without counsel save counsel fees”). There
are strong public policy reasons not to disturb the existing practices of market participants.
These existing practices are already regulated by federal” and state lending laws” and largely
standardized due to the securitization of many loan portfolios. See OCC Handbook at 3
(observing that there are traditionally two forms of residential mortgage loans (government!
mortgage loans and conventional mortgage loans), which “have limits 0n the maximum amount i
that may be borrowed” and “have specific underwriting standards”).
HSee, e.g., 15 U.S.C. § 1635 (providing for right to rescind a non-purchase money security
interest on a principal dwelling (e.g., home equity loans and transactions that refinance purchase-
money mortgages) within three days of the closing or receipt of the notice of the right to
rescind); see also 12 C.F.R. §§ 1024.1 et seq. (regulations from the Consumer Financial
Protection Bureau (“CFPB”) implementing federal Real Estate Settlement Procedures Act); 12
C.F.R §§ 1026.1 et seq. (regulations from the CFPB implemenfing federal Truth in Lending
Act).
12See, e.g., R.I. Gen. Laws § 5-20.8-2 (describing disclosure requirements for sales of real
estate).i
21
12/7/201 8 9:24 AMW
'
Additionally, title companies (insurers and agents) are separately licensed and
regulated in Rhode Island by the Department of Business Regulation.” Title agents are in turn
subj ect t0 strict standards and regular monitoring by the title insurance companies. As the
Kentucky Supreme Court concluded after examining title industry practices in detail:
The evidence shows that national title insurance underwriters
require their agents, whether attorneys 0r non—attorneys, to carry
errors and omissions insurance. And, most of the title industry
representatives testified that these same underwriters exercise strict
control over their agents by periodically monitoring their use of
funds and their competence.
Countrywide Home Loans, 113 S.W.3d at 120-21.
Even in the absence of the scrupulous oversight that exists in Rhode Island and
elsewhere, there are powerful incentives for title agents to provide high quality, competent
service in order to stay in business and avoid negligence claims. Id. (“What we commonly refer
to as a ‘malpractice claim,’ is nothing more than a legal negligence claim, and lay closing agents
are equally subj ect to common law negligence claims if their negligence results in damages.”).
Given the oversight already in place and the substantial pecuniary and public policy costs
‘3R.I. Gen. Laws § 27-2.4-3 (requiring insurer to obtain license); id. § 27-2.4-8 (providing that
insurance commissioner must approve applications for an insurance license); id. § 27-24-21
(authorizing insurance commissioner to promulgate rules and regulations); R.I. Gen. Laws § 27-
2.6-7 (setting minimum capital requirements for title insurers); id. § 27-.2.6-13 (requiring title
insurers to use title insurance agents licensed by Rhode Island).
22
12/7/201 8 9:24 AM
involved, the Court should rej ect the Committee’s invitation to define the title insurance and real
estate closing/settlement services at issue here as the practice of law.”
D. The Court Should Not Declare That Powers 0f Attorney And Residency Affidavits
Can Be Prepared Only Bj An Attorney.
The Committee recommends that this Court ban non-attomeys from preparing
powers of attorney (“POA”) and residency affidavits “on behalf of a party to a real estate
transaction.” Balkun Report at 63-64. Both types of documents are common and standardized
(as are, for that matter, mortgages, promissory notes, purchase and sales agreements and other
documents typical of real estate transactions). See R.I. Gen Laws § 18-16-2 (a statutory short
form power 0f attorney); Seller’s Residency Affidavit from the State of Rhode Island — Division
of Taxation, available at http://www.tax.ri.20v/forms/ 1997/pers/7130.pdf; Palomar, 31 Conn. L.
Rev. at 442 (“In fact, the residential real estate transaction has become standardized in large
part”). The public interest will not be served by mandating that an attorney prepare these
standard documents for every real estate transaction. See id. at 520.
The Committee’s recommendation regarding POA use also raises a concern to
banks and credit unions because of the implications for the non-real estate context. Amici note
that standard form POAs are used regularly by branch personnel in opening accounts or in
meeting the specific needs of their customers. These POAs are provided by the lender 0r in
some instances are provided by the customer. A substantial number of retail banking clients are
'4 As noted above, the Committee’s analysis could potentially be applied to purchase and sale
contracts and other documents executed at the beginning of a real estate transaction that the
General Assembly has determined may be prepared by real estate licensees. The public interest
would not be served by such an expansive (and expensive for consumers) reinterpretation of the
practice of law, in part because real estate licensees are also already subject to protective
licensing requirements. See, e.g., R.I. Gen. Laws § 5-20.5-4 (providing for licensing
examination for real estate brokers and salespersons); id. § 5-20.5-25 (requiring real estate
licensees to carry errors and omissions insurance); id. § 5-20.5-5 (requiring real estate licensees
to fund a Real Estate Recovery Account).
23
12/7/201 8 9:24 AM
seniors and these customers generally want a family member with POA authority in the event of
their hospitalization or other emergency. This segment 0f clients may also have mobility issues
and are on fixed incomes. The added inconvenience of obtaining and driving to or getting a ride
t0 an attorney’s office could create a hardship, not to mention the attomey’s fee to prepare the
document. For younger customers and the millennial population, a POA is often requested to
ensure that their affairs are taken care ofwhen they either travel or work abroad, are on military
deployment, or are single without a joint account holder.
To meet these needs, banks and credit unions have been routinely providing POA
forms for decades. In Amici’s experience, most POAs are approved by a lender’s legal
department, there is no charge t0 the customer for this service and the POAs are in complete
compliance with current Rhode Island state law. To ensure that customers have full disclosure, it
is a common practice within the industry to have verbiage containing important customer
information at the top of the form advising customers of things they should understand before
signing the document. In light of these safeguards, as well as the longstanding common practice,
this Court should reject the Balkun Report’s recommendation. See Town osz'ttle Compton, 37 I
A.3d at 92—95. i
E. The Committee’s Recommendations Do Not Address Rule 1.7 Of The Rules OfProfessional Conduct .
The Committee’s recommendations also do not address the issue of which parties
the closing attorney represents and avoids a key practical problem with its conclusion — conflicts.
The Committee appears to expect that in most transactions a closing attorney will represent
multiple clients:
[T]he closer has a number of duties to the clients, including
protecting the interest of their clients in the transaction, ensuring
marketable title, and effectuating a valid conveyance.
24
12/7/201 8 9:24 AM
Accordingly, the Committee recommends that the Supreme Court
reserve this important function t0 duly licensed lawyers.
See SouthCoast Report at 3 1. The Committee’s emphasis on the “pitfalls” of buying a home, id.,
would seem to acknowledge that a buyer, seller and lender have foreseeable conflicts of interest
within the meaning of R.I. Rule of Professional Conduct 1.7. As set forth in Comment 8 to Rule
1.7, “[e]ven where there is no direct adverseness, a conflict exists if there is a significant risk that
a lawyer’s ability to carry out an appropriate course of action will be materially limited as a
result of the lawyer’s other responsibilities 0r interests.” Thus, if one attorney is the closer, that
attorney would need to consider for each transaction whether a conflict waiver is needed and, if
so, obtain informed consent in writing before proceeding with the representation. A reasonable
investigation into the potential for a conflict would likely add additional cost.
The Committee’s view that real estate closings are the practice of law because of i
the “monumental” legal consequences would seem likely to have the unintended impact of
requiring all parties to obtain their own counsel, at substantial extra cost. Other courts that have
considered this issue “have found an inherent conflict of interest when a service provider’s own
attorneys purport to represent 0r furnish legal services t0 the provider’s customers. Such dual
representations have drawn universal condemnation, often accompanied by ominous references
t0 the local professional ethics rules.” In re First Escrow, Ina, 840 S.W.2d 839, 848 (Mo. 1992)
(citing cases). As the Supreme Court of Kentucky has observed:
The only way to ensure this benefit of independent counsel that the
[Kentucky Bar Association] considers so important is to require all
parties to the transaction to obtain their own counsel. Although werecognize that persons with the financial wherewithal to do so maywish to retain independent counsel for a real estate closing, we also
recognize that for us to require parties t0 have independent counsel
would substantially increase the transactional costs associated with
a home purchase and thus run contrary to the public’s interest.
25
12/7/201 8 9:24 AM '
Countrywide Home Loans, Ina, 113 S.W.3d at 123. In recognition of the potential for conflicts
of interest, and the additional costs that would need to be incurred in the form of additional
attomeys’ fees to address it, this Court should adopt the reasoning of the Kentucky Supreme
Court and reject the Committee’s determination that a real estate closing is the practice of law.
CONCLUSION
For the foregoing reasons, this Court should rej ect the Committee’s
recommendations and determine that the title insurance and real estate closing/settlement
services at issue are not the practice 0f law.
Respectfully submitted,
RHODE ISLAND BANKERSASSOCIATION, RHODE ISLANDMORTGAGE BANKERS ASSOCIATION,INC., RHODE ISLAND ASSOCIATIONOF REALTORS®, INC, COOPERATIVECREDIT UNION ASSOCIATION,EQUITY NATIONAL TITLE ANDCLOSING SERVICES, INC. and
LINCOLN ABSTRACT & SETTLEMENTSERVICES, LLC
By] ei Attorneys,
PAR/T DGE SNOW & HAHN LLP
\ aul M. Kessimian (#7127)
40 Westminster Street, Suite 1100
Providence, RI 02903
(401) 861-8200
(401) 861-8210 [email protected]
Eobert K. Taylor (#65 14)
I
DATED: November 30, 2018
26
12/7/201 8 9:24 AM
CERTIFICATE OF SERVICE
I hereby certify that on the 30th day ofNovember, 2018 copy of the foregoing
document was sent by prepaid first class mail addressed to the following:
Robert A. D’Amico, II, Esq. Michael W. Field, Esq.
James V. Burchfield, Jr., Esq. Assistant Attorney General
D’Amico Burchfield, LLP R.I. Dept. of Attorney General
536 Atwells Avenue 150 South Main Street
Providence, RI 02903 Providence, RI 02903
Gregory Piccirilli, Esq. Lauren E. Jones, Esq.
Sciacca & Piccirilli Jones Associates
121 Phenix Avenue 72 South Main Street
Cranston, RI 02920 Providence, RI 02903
Thomas M. Dickinson, Esq. Steven M. Richard, Esq.
Law Office of Thomas M. Dickinson Nixon Peabody LLP13 12 Atwood Avenue One Citizens Plaza, Suite 500
Johnston, RI 02919 Providence, RI 02903‘
Thomas W. Lyons, Esq. J. Richard Ratcliffe, Esq.i
Strauss, Factor, Laing & Lyons Ratcliffe Harten Galamaga LLP ='
One Davol Square, Suite 305 40 Westminster Street, Suite 700f
Providence, RI 02903 Providence, RI 02903i
Zachary A. Cunha, Esq. Thomas M. Bergeron, Esq.
Assistant U.S. Attorney Rhode Island Supreme Courti
Office of the U.S. Attorney 250 Benefit Street .I
50 Kennedy Plaza, 8th Floor Providence, RI 02903
Providence, RI 02903
Matthew L. Fabisch, Esq. Giovanni Cicione, Esq.
Fabish Law Offices Cameron & Mittleman
4474 Post Road 301 Promenade Street
East Greenwich, RI 02818 Providence, RI 02908
273413234.1/16045-2
12/7/201 8 9:24 AM
12/7/201 8'924 AM
The Warren Group Order 'Count Request’ Report Septemberzs, 2018
The Warren Group Job Name: Equity National Order- Sales Rep: William D Vlsconti
280 Summer Street
Boston. MA 021 10
phone: (617) 428 5100
www.thewarrengroup.com
09/28/201 8-H
Record Count Descrlptlon:
All Transactions with the following selection criteria:
Location:
State: RI
Counties: Not Selected
Towns: Not Selected
Zipcodes: Not Selected
Address Level: All records
Phone Level: AH records
Sales z Mortgage Transacglon Details:
Sales Dates: Gremer than 01/01/2017 and less than 12/31/201 7
Sales Price: Not Selected
Mortgage Dates: Not Selected
Mortgage Amount: Greater than $1 .000
Mthat: Not Selected
Loan-to-Value Ratio: Not Selected
Lenders:
Lender Groups: Not Selected
Individual Lenders: Not Selected
Prefim Usage;
Property Use Groups: Not Selected
Propefly Use Codes: Not Selected
Record Count Results:
Group Description Count
Bristol 2104
Kent 7638
Newport 3685
Providence 22038
Washington 5863
Total Record Count: 41328
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