VIRGINIA UPL OPINION 197


Non-Lawyer Representation of Party to a Real Estate Transaction.

You have presented a hypothetical situation in which an Attorney who is the settlement agent for a real estate transaction has received a contract with an addendum which indicates that the settlement agent was chosen by the purchaser and that seller will have a separate attorney. The contract further states, “Fees for the preparation of the deed, that portion of the Settlement Agent’s fee billed to the Seller, costs of releasing existing encumbrances, appropriate legal fees and any other proper charges assessed to the Seller shall be paid by the Seller.??? Subsequently, the Attorney receives a letter from a title company stating: 1) that the title company has been retained to represent the seller; 2) that the title company will prepare the sellerís documents, including the deed, the Certificate of Satisfaction, etc.; and 3) that Attorney’s settlement statement should show no charges to the seller from Attorney. The letter further states that the title company’s fee to the seller should be shown on the settlement statement, payable to the title company, and that seller will sign all documents in the title company’s office.

The Committee considered your inquiry at its December 14, 2000 meeting and has directed me to transmit its conclusions to you.

Under the facts you have presented, you have asked the committee to opine on the following questions:

1. Can the title company be retained to represent the seller in the real estate transaction if the title company is not the settlement agent named in the contract?

a. If so, does representation by a title company put the named settlement agent in the same position as if the sellers were represented by an attorney, i.e., does this representation by a title company relieve the seller of any charges by the settlement agent except those disclosed and agreed to by the seller?

b. If the title company can represent the seller, can the fee to the title company on the settlement statement include the preparation of the deed, or should this be itemized separately with the preparing attorneyís name?

No. The Committee has determined that based upon your facts that since the title company is not serving as the settlement agent in this transaction under the Consumer Real Estate Settlement Protection Act (CRESPA), the Act does not apply, and the company cannot provide any escrow, settlement or closing services under the Consumer Real Estate Settlement Protection Act (CRESPA). Since the Act does not apply, the title company is not authorized to prepare any legal instruments on behalf of seller or collect a fee for doing so. [1] UPRs 6-101, 6-102 and 6-103. Further, the title company cannot hold itself out as authorized to undertake a legal representation of a person and is not authorized to give legal advice to the seller or prepare legal instruments because such activity constitutes the unauthorized practice of law. Va. S. Ct. R., pt. 6, §I, UPR 6-101 (A). [2]

n response to your subquestions, it is the opinion of the committee that the named settlement agent is placed in the position of dealing with sellers who are not represented by counsel, because the title company is not authorized by law to act as an attorney for sellers. Since the title company cannot lawfully prepare the deed on behalf of the sellers, the fee charged by the title company on the settlement statement cannot include a fee for the preparation of the deed by the title company. [3] If an attorney not directly employed by the title company prepared the deed, the fee charged for deed preparation should be itemized separately with the preparing attorney's name and paid to that attorney.

2. If Attorney complies with the instructions of the title company, is Attorney aiding the unauthorized practice of law and thus subject to disciplinary action?

This is an ethics question, not an unauthorized practice matter, and is beyond the purview of this committee. This issue has been referred to the Standing Committee on Legal Ethics.

3. Would the answers be different if the person representing the title company is an attorney who owns or is employed by the title company?

No. Your inquiry presents two scenarios, one in which a Virginia licensed attorney in private practice owns the title company and another in which the attorney is an employee of the title company. In both situations, it would appear that the attorney is representing the title company and not the seller. If the seller needs or desires legal representation, the seller cannot be represented by the attorney employed by the title company. The title company is a lay entity which is not authorized to practice law, and cannot employ its attorney to provide legal services to its customers. Richmond Ass’n of Credit Men v. Bar Ass’n of City of Richmond, 167 Va. 327, 189 S.E. 153 (1937); UPL Op. #60 (1985). Under both CRESPA and the UPL rules, only an attorney engaged in private practice specifically retained by the seller may undertake legal representation of the seller.

4. Can an attorney acting in his capacity as an owner/employee of a title company ethically perform legal services for clients of the title company, or is he considered to be the same as a non-attorney in his relationship with title company clients? Are the clients considered to be represented by their own attorney in this situation?

Generally it is the unauthorized practice of law for a lawyer employed by a lay corporation to provide legal services to its customers. Richmond Ass’n of Credit Men v. Bar Ass’n of City of Richmond, supra. Therefore, the committee would regard such an attorney as a non-lawyer in the circumstances you present. The committee opines that only a Virginia licensed attorney engaged in the private practice of law may undertake a legal representation of a party to a real estate closing. Thus, in the facts you present, the attorney employed by the title company is to be treated as a non-attorney for purposes of your inquiry and the seller is not to be considered as represented by their own attorney in this situation.

Committee Opinion
Issued June 26, 2000

Revised January 22, 2001

Approved by Council
June 14, 2001

Approved by Va. Supreme Court
October 1, 2001


  1. A non-lawyer settlement agent registered under CRESPA is authorized to prepare settlement statements and complete form documents and instruments selected by and in accordance with instructions of the parties to the transaction. Virginia Code § 6.1-2.20. A non-lawyer shall not, with or without compensation, prepare for another legal instruments of any character affecting the title to or use of real estate UPR 6-103 (A).

  2. Even if the title company were serving as a registered settlement agent pursuant to the Consumer Real Estate Settlement Protection Act (CRESPA), the title company is prohibited from giving legal advice to the parties to the transaction. See, e.g., Va. Code § 6.1-2.22 (No settlement agent can provide legal advice to any party to the transaction except a settlement agent who is engaged in the private practice of law in Virginia and who has been retained or engaged by a party to the transaction for the purpose of providing legal services to that party). However, CRESPA has no application to this inquiry since the title company is not acting as settlement agent.

  3. A non-lawyer is not entitled to collect a fee for providing legal services which they are not authorized to perform. Va. S. Ct. R., pt. 6, § I (Introduction) (“Any fees charged by a person engaged in the unauthorized practice of law are not collectible in court.???); UPL Op. #112 (1990) (It is the unauthorized practice of law for a mortgage company to make a separate charge for the preparation of legal instruments affecting title to real estate in connection with a real estate closing.)

 

Updated: Aug 28, 2006