Most South Carolina dirt lawyers were disappointed with the result of the 2017 Quicken Loan case which did not hold, as many had hoped, that a South Carolina licensed lawyer must be at the center of each residential real estate closing, overseeing each step, and ensuring that the consumer client’s interests are protected in each step. That case blessed a scenario where an out-of-state entity oversaw the closing process and divvied up the required lawyer functions among various functions.
A disciplinary case* from August of 2021 demonstrates just one way the scenario approved by Quicken can go awry.
The lawyer was hired by Superior Closing and Title Services, LLC to serve as closing attorney for a home purchase for an attorney’s fee of $200. That fee is our first clue about the type of closing that is the subject of this case. The Court refers to the purchaser as “C.W.” The lender was 1st Choice Mortgage, and the loan was assigned to Wells Fargo.
Almost two years after the closing, Wells Fargo demanded 1st Choice repurchase the loan because of a discrepancy with the title. The Court states “it was discovered” that C.W. was a straw purchaser who never made a payment on the loan. The lawyer argued, and the Office of Disciplinary Counsel did not dispute, that the lawyer was unaware of the straw purchase. The closing statement showed a payment by C.W. of $11,598.16. At the closing, a copy of a $12,000 cashier’s check made payable to Superior Closing was shown to the lawyer and to 1st Choice Mortgage as the source of the down payment.
The lawyer signed the normal certification at closing representing that the settlement statement was a true and accurate account of the transaction.
The $12,000 check was never negotiated, and 1st Choice never received the funds. 1st Choice paid over $39,000 to settle the claim with Wells Fargo.
1st Choice sued Superior Closing and the lawyer. The lawyer represented that Superior Closing prepared the closing statement and acknowledged that he failed to properly supervise the preparation of the settlement statement and the disbursement of funds. As a result of the lawsuit, a $39,739 judgment was filed against the lawyer and Superior Closing. The judgment has been satisfied.
We all know how challenging it is to supervise the disbursement of a residential closing where the funds do not flow through the closing attorney’s trust account. This disciplinary case demonstrates the danger of skipping that problematic but necessary step.
*In the Matter of Ebener, South Carolina Supreme Court Opinion No. 28047 (August 11, 2021)