Georgia On My Mind

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GA Supreme Court takes a page from our playbook and prohibits “witness only” closings

On September 22, 2014, The Supreme Court of Georgia issued an opinion approving the State Bar’s Formal Advisory Opinion No. 13-1, which states that a Georgia licensed lawyer may not ethically conduct a “witness only” closing.

georgia with flagThe Court indicated a “witness only” closing occurs when an individual presides over the execution of closing documents but purports to do so merely as a witness and notary and not as someone who is practicing law. In order to protect the public from those not properly trained or qualified to render these services, lawyers are required to “be in control of the closing process from beginning to end,” according to the opinion.

The opinion also requires the closing attorney to review the closing documents, resolve errors in the paperwork, and detect and resolve ambiguities in title and title defects, indicating, “A lawyer conducting a real estate closing may use documents prepared by others after ensuring their accuracy, making necessary revisions, and adopting the work.”

The closing lawyer must “review and adopt” the work used in a closing, even if he or she didn’t prepare that work.  Georgia law allows title insurance companies and others to examine title records, prepare abstracts and issue related insurance.  And other persons may provide attorneys with paralegal and clerical services, so long as “at all times the attorney receiving the information or services shall maintain full professional and direct responsibility to his clients for the information and services received.”

The obligation to review, revise, approve and adopt documents used in closings applies to “the entire series of events that comprise a closing.”

I’m a South Carolina dirt lawyer, so I don’t have the background to comment at length on this opinion, but from my bank of the Savannah River, it seems this opinion places closing lawyers in a precarious position, not unlike the position of our Bidding on a homepractitioners. We don’t necessarily have to perform all aspects of closings, but we do have to supervise and take professional responsibility for the entire closing.  We have learned how difficult it is to supervise third parties and take responsibility for their work.  The Georgia Bar asked for this opinion.  I hope they like it!

Surely Dave Whitener is smiling down from heaven at this effort to rein in the unauthorized practice of law!

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Who Will Get On the Wells Fargo Wagon?

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Wells Fargo announces it will generate and deliver the Closing Disclosure

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Wells Fargo announced on September 24, 2014 that it will generate and deliver the borrower’s Closing Disclosure when the TILA-RESPA Integrated Disclosure Rule becomes effective on August 1, 2015.

Software companies, title insurance companies and closing attorneys have been speculating about this for many months. Now we have an answer, at least as to this mega-lender. Whether other lenders will fall in line remains to be seen.  The stated rationale is that the process will allow Wells Fargo to consistently meet compliance and regulator expectations.

The announcement stated that Wells will continue to collaborate with closing attorneys to determine fees and other content required for the Closing Disclosure and to ensure that the lender has accurate information.

For purchase transactions, the closing attorney will continue to be responsible for the seller’s information and will prepare and deliver the seller’s Closing Disclosure. A copy must be provided to Wells Fargo.

The Closing Disclosure must be delivered three business days prior to the closing, and Wells Fargo anticipates this requirement will require that all the parties work together more than ever on scheduling closings.

Conducting closings will continue to be the responsibility of closing attorneys, but with increasing focus on compliance with the lender’s closing instructions, according to this announcement.

This announcement has a huge impact on the closing process. The closing attorney will continue to be responsible for gathering information required to generate the document that replaces the HUD-1 Settlement Statement, but Wells Fargo, not the closing attorney’s office, will actually generate and deliver the form.

Please recall that Wells Fargo is the lender that endorsed ALTA’s Best Practices. My best advice for residential closing attorneys in South Carolina who want to remain in the game after August, 2015?  Get your office in compliance with Best Practices now so you will be prepared to implement the hardware/software changes this announced “collaborating” with lenders will require.

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Embrace ALTA’s Best Practices

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 BestPractices2Some real estate practitioners are furiously bringing themselves into compliance with ALTA’s Best Practices, while others are furiously ignoring the entire topic or, at best, waiting until they hear marching orders from lenders. I propose that we all step to the plate and embrace Best Practices.

Residential practitioners can and should use compliance as a marketing tool. Some commercial practitioners are assuming that when lenders become educated and begin demanding compliance from residential practitioners, they will naturally ask for the same or similar compliance from commercial practitioners. Striving for compliance is an opportunity for all practitioners to demonstrate to their clients, to real estate agents and to lenders their value in real estate transactions.

ALTA is now encouraging practitioners to conduct a self-assessment of their adoption of Best Practices by September of 2014. Time may be of the essence because a practitioner may first hear marching orders from a lender in connection with a specific real estate closing. If it is impossible to demonstrate compliance quickly, that closing will likely be lost to someone who is better prepared.Best-Practice-processes

I am convinced that the numbers of residential real estate practitioners in South Carolina will be drastically reduced in the next year or two. Attorneys approaching retirement age may decide to retire rather than to learn how to use the new forms. Large law firms  who handle commercial transactions may decide that residential transactions are no longer worth the effort. Left standing will be the practitioners who embrace this change and tackle it now. There is opportunity for growth for those who act wisely in the face of change.

Title insurance companies are willing and able to help and have resources that can ease the pain. But no outsider can do the actual work. Each pillar requires careful consideration from a management standpoint, and only the closing attorneys themselves can make the necessary decisions for implementation. Each pillar will require on-going demonstration of compliance. Files must be papered. Calendars must be tickled. Software and hardware must be kept current. Compliance will not be a matter of establishing written procedures and continuing business as usual. We should establish a culture of compliance and make it the responsibility of all employees.

I can’t say this strongly enough: At some point, practitioners will either have to embrace compliance or get out of the game. The time to act is now.

If you want to continue to handle residential real estate transactions, call your title insurance company today and ask for assistance in nailing down each pillar.

A Life Well Lived …

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Hugh Dave WhitenerHugh Dave Whitener, Jr.
September 14, 1944 – September 14, 2014

It is with great sadness, but with immense respect and admiration that South Carolina real estate lawyers, in conjunction with a host others, prepare to say farewell to Dave Whitener, who died this week after a long battle with cancer.

Dave was the consummate lawyer-educator who taught, mentored, nurtured and molded many of us in the practice of transactional law. He was a University of South Carolina School of Law Platinum Compleat Lawyer as well as an Adjunct Professor at that treasured school for 24 years. He was the ideal professor in that his love for the law was only exceeded by his love for students. He never taught from a theoretical ivory tower, but from a concrete point of view, grounded in decades of practical experience. As a result, he was awarded the school’s Excellence in Teaching and Distinguished Service Award.

Dave was an entertaining and engaging seminar speaker. A group of real estate lawyers can recite many of his best stories that were told well and often and always with a sense of humor.

He was a protector of our practice. Many of us remember the seminar several years ago when he first began speaking about “The Palmetto Logs”, a list of authorities beginning with the South Carolina Constitution and meandering through State v. Buyers Service Co., Inc., and its progeny. He encouraged us to use The Palmetto Logs to protect our practice from those who participate in the unauthorized practice of law, those who demean our practice, and those who seek to take it away from us.

We extend our condolences to our friend and Dave’s wife and law partner, Trisha Wharton Whitener, and to all of Dave’s family. And we send to them a word of appreciation for sharing him with us.

Tell it to Grandma!

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DSC_1879aWhen my friend and mentor Chris Abbinante was President of American Land Title Association, he encouraged real estate professionals to explain what we do in terms our grandmothers can understand. He said when we can explain the value of our profession to our grandmothers; we will be able to be to enlighten our clients. Knowledgeable clients who recognize our value are more satisfied, more willing to pay our fees and more likely to return for future transactions.

  Our jobs are important and honorable! We assist consumers in realizing the American dream. We hold their hands during their most significant purchases. We examine the titles to identify and eliminate risks. We draft documents to protect their interests. We explain documents to confirm clients understand their obligations.

We are entrusted with and carefully handle closing funds. We vigilantly maintain our trust accounts so client funds will be safe. We protect our clients’ private, sensitive information. We are mortgage fraud watch dogs. We provide clients with the best title insurance products available so that the title to their investment will be protected from third parties by reputable and solvent companies. When they leave our offices, they hold keys to the home where their family will live. There is a reason we call the scheduled event a “closing”. It is the end, the culmination of the process of dreaming about, finding, and obtaining a home.

Commercial practitioners assist clients in procuring properties for their business activities or for investment purposes using the skills that no other professional can provide. We form their business entities. We assist with accumulating multiple properties for a single endeavor. We assist clients in satisfying the requirements of their lenders. We know when to call on other professionals…surveyors, inspectors, appraisers, environmental engineers, attorneys and bankruptcy attorneys. We protect clients’ equity and assist in their business pursuits. After their closings, they can begin to build their office buildings, shopping centers and residential subdivisions. Commercial practitioners also assist clients in achieving the American dream.

Learn to articulate your story. Own your story! Tell your story, like you would tell Grandma, to real estate agents, builders, lenders, developers, service organizations and others. This is Marketing for Dirt Lawyers 101. You will see results!