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RI Supreme Court rules on unauthorized practice of law

After months of anticipation, the Rhode Island Supreme Court upheld the legal right of title companies to conduct residential real estate closings of transactions and prepare routine documents without an attorney for transactions that the title companies are insuring. However, the court also decided only attorneys can draft deeds and conduct title examination for the marketability of the property.  https://www.courts.ri.gov/Courts/SupremeCourt/SupremeOpinions/18-161,%20162,%20163.pdf

While the Rhode Island Supreme Court encouraged consumers to seek legal advice from attorneys, the court declined to require them to do so.   The Court was concerned that requiring the use of an attorney to draft all legal documents in a residential real estate transaction could lead to increased  closing costs for consumers because the lender, buyer and seller would need their own attorneys.  The Court also determined that it had not been provided with documentation of widespread harm to consumers who use non-attorneys for closings in other states.

This decision is important for real estate licensees, lenders, corporations, credit unions and others with limited exemptions from the unauthorized practice of law statute that allows them to prepare legal documents for transactions in the course of their business.  Real estate licensees can continue to prepare purchase and sales agreements, leases, and other documents in connection with sales or leases “made or negotiated” by him or her, but not deeds.

Realtors should:

  • Use fill-in-the-blank RIAR, MLS, other or forms from your brokerage that have been vetted by an attorney;
  • Make sure to disclose that you are not an attorney;
  • Not provide legal advice to clients and customers;
  • Advise customers and clients to seek the advice of an attorney if they do not understand what they are signing or have legal questions.

The Rhode Island Association of REALTORS®, RI Bankers Association, RIMBA, Cooperative Credit Union Association, Equity Title and others joined forces to file an amicus curiae to defend the exemption for title companies.  Rhode Island Housing, the Federal Trade Commission and several other organizations filed separate briefs to support consumer choice.

Questions?  Please contact the RIAR Legal Department at 401-432-6945 or email monica@rirealtors.org.

 

 

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