Can a lawyer join a title company's network and conduct loan closings using documents the lender prepared, and what must the lawyer tell the borrower?

Plain-English summary

ABC Co., a title company, contracted with a lending institution to provide title insurance and coordinate residential loan closings, and wanted to enlist Attorney B in a network of approved attorneys who would perform closings under ABC Co.'s instructions. The lender would prepare all closing documents and forward them to Attorney B, who would meet the parties, explain the documents, supervise their execution, and return them to ABC Co. The inquiry asked whether Attorney B could handle closings in this manner.

The opinion answered yes. Under State v. Pledger, 257 N.C. 634, 127 S.E.2d 337 (1962), the lender has a primary interest in the closing documents, so the lender may draft them and Attorney B does not assist the unauthorized practice of law by conducting the closing on these facts. The opinion added that if Attorney B intends to represent only the lender at the closing, he must clearly notify the borrower in time to permit the borrower to obtain other counsel.

Currency note

This opinion was issued in 1989, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can the lender prepare the closing documents?

A: Yes. The opinion concluded that because the lender has a primary interest in the documents, it may draft them under State v. Pledger.

Q: Does the lawyer aid the unauthorized practice of law by conducting such a closing?

A: No. The opinion concluded the lawyer does not assist the unauthorized practice of law by conducting the closing under these circumstances.

Q: What must a lawyer who represents only the lender tell the borrower?

A: The opinion concluded the lawyer must clearly notify the borrower, in time for the borrower to obtain other counsel, that the lawyer represents only the lender.

Background and rules framework

The opinion did not cite a numbered Rule of Professional Conduct. It applied the unauthorized-practice principle of State v. Pledger, under which a party with a primary interest in a document may prepare it, to conclude the lender's document preparation did not draw the lawyer into assisting unauthorized practice, and it required disclosure to the borrower where the lawyer represented only the lender.

Citations and references

Cases:

• State v. Pledger, 257 N.C. 634, 127 S.E.2d 337 (1962), a party with a primary interest in a document may prepare it

See also

• NC Ethics Op. RPC 40: lender preparation of closing documents
• NC Ethics Op. RPC 44: attorney's obligation to follow closing instructions

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-41/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

ABC Co. is a title company which has contracted with a lending institution to provide title insurance and coordinate residential loan closings. ABC Co. wishes to enlist Attorney B as part of a "network" of approved attorneys who will perform closings subject to ABC Co.'s instructions.

All closing documents will be prepared by the lender and forwarded to Attorney B, who will meet with the parties, explain the documents and supervise their execution. Attorney B will then return the documents to ABC Co.

May Attorney B agree to handle closings in this manner?

Opinion:

Yes. The lender has a primary interest in the closing documents pursuant to State v. Pledger, 257 N.C. 634, 127 S.E.2d 337 (1962). Thus, the lender may draft the closing documents and Attorney B will not be assisting the unauthorized practice of law by conducting the closing under these circumstances.

If Attorney B intends only to represent the lender at the closing, he must clearly notify the borrower in time to permit the borrower to obtain other counsel.