This is entirely Jack Murray. He sent it, and in a rush to keep up DD transmissions, I'm sending it virtually unedited, which won't really hurt Jack. But all the usual credits, waivers and disclaimers apply. > UNAUTHORIZED PRACTICE OF LAW/TITLE SEARCH AND REPORT FOR TAX SALE > The South Carolina Supreme Court has held, in a petition for a declaratory > judgment, that when nonlawyer title abstractors examine public records in > connection with a title search and then render an opinion as to the > content of those records in connection with a tax foreclosure sale, they > are engaged in the unauthorized practice of law. Ex Parte: Charles M Watson, Jr., County Atty. for Greenwood > County, Petitioner.; In Re: The Unauthorized Practice of Law, 2003 S.C. > LEXIS 293 (Sup. Ct. of S. C. Dec. 1, 2003) > In this case, the petitioner, who is the County Attorney for Greenwood > County, S.C., sought a declaratory judgment on behalf of tax collectors > and County Attorneys throughout the state as to "whether title > abstractors, when performing their duties without an attorney's > supervision, are engaged in the unauthorized practice of law." Apparently, > this had been a matter of dispute and contention among tax collectors and > county attorneys. > In connection with tax foreclosure sales of real property in South > Carolina, tax collectors must provide notice of the sale to the property > owner and any lien holders. To determine what parties are entitled to > notice, tax collectors commonly hire title abstractors to examine the > public records and report the status of title. These abstractors usually > are not licensed attorneys. > The petitioning County Attorney asserted that a nonlawyer title abstractor > who examines public records and reports the status of title, without the > supervision of an attorney, is engaged in the unauthorized practice of > law. > The South Carolina Supreme Court, based on precedent established by other > recent case law in South Carolina, agreed with the petitioner. The court > cited with approval its prior holdings in State v. Buyers Serv., Inc., 292 > S.C. 426, 432-33 (preparation of title abstracts by title companies for > purchasers of residential real estate without supervision of attorney > constitutes unauthorized practice of law); Doe v. McMaster, 355 S.C. 306 > (2003) (title company's title search and preparation of title documents > for lender, without supervision of attorney, is unauthorized practice of > law); and Matter of Lester, 353 S.C. 246, 247 (2003) (disciplining > attorney for authorizing paralegal to conduct closing where attorney was > not present). > Based on these precedents, the court stated that, "we find that examining > titles and preparing title abstracts constitute practicing law. Therefore, > we require that licensed attorneys either conduct or supervise such > activities." Id. at *4-5. The court reasoned that because property > owners, buyers, lien holders, and counties all depend on the tax collector > to properly notify those parties statutorily entitled to notice, any > errors in the title abstractor's report could result in the tax sale being > invalidated and exposure of the county to due-process claims form parties > who claimed they did not receive notice. The court further noted that even > if the title abstractor's report was not guaranteeing title or certifying > that title was marketable (the court acknowledged that "the tax title is > of a quitclaim-deed nature"), it still had a "legal effect," i.e., "it > signifies that title has been conveyed," and must either be prepared or > approved by a licensed South Carolina attorney. Id. at *5. According to > the court, "if a licensed attorney reviews the title abstractor's report > and vouches for its legal sufficiency by signing the report, title > abstractors would not be engaged in the unauthorized practice of law." Id. > at *6. > Finally, the court acknowledged that the cost of the tax-sale process to > counties would increase if attorney involvement were required in the > performance or oversight of title examination and abstract function, but > decided that this factor was outweighed by the concern that mistakes in > these functions as the result of the non-involvement of attorneys (such as > failing to notify the proper parties), and reliance on potentially > defective reports, would cause greater harm and prove even more costly in > the long run. > > Reporter's Comment: > 1) In Doe v. McMaster, 355 S.C. 306 (2003), decided in August of this > year, the South Carolina Supreme Court held (in a declaratory judgment > action) that a lawyer's supervisory activities in the context of > refinancing a real estate mortgage involving four steps (title search, > preparation of loan documents, closing, and recording title and mortgage) > did not constitute the unauthorized practice of law. The lawyer had > petitioned the state supreme court to "determine whether his business > association with a lender bank and a title insurance company constituted > the unauthorized practice of law." The court held that the preparation of > real estate instruments by lay persons constitutes the unauthorized > practice of law, and that without the presence of an independent > supervising attorney the lender could not prepare such instruments. The > court also ruled that real estate and mortgage closings should be > conducted only under the supervision of independent attorneys (who are not > the employees of title companies, and who, if they represent both the > lender and the buyer, must "giv[e] full disclosure of [their] role to both > parties and obtain[] consent from both parties to continue." The court > further held that the recordation of a new mortgage and related documents > "occurs as part of a real estate transfer, which is an aspect of > conveyancing affecting legal rights, [and] is the practice of law, "which > requires attorney supervision of the process." > Interestingly, the lawyer who filed this petition to the court asked for a > declaration that the title company had a right to furnish title because > "it is incidental to its business." However, the court ruled that in the > prior case of State v. Buyers Service Co., Inc., 292 S.C. 426, 432 (1987), > it had "rejected the title company's argument that it did not need > attorney supervision because the title search was merely incidental to > their own business." The court in Doe v. McMaster ruled that, "Title > Company's title search and preparation of title documents for the Lender, > without direct attorney supervision, constitutes the unauthorized practice > of law. The title search and subsequent preparation of related > documentation is permissible only when a licensed attorney supervises the > process. In order to comply with this Court's ruling [the petitioner] must > insure the title search and preparation of the loan documents are > supervised by an attorney." 355 S.C. at 312-13. The South Carolina Supreme > Court cited prior case law in the state for the proposition that the > practice of law "is not confined to litigation, but extends to activities > in other fields which entail specialized legal knowledge and ability > (citation omitted). For this reason, this Court has consistently refrained > from adopting a specific rule to define the practice of law." Id. at > 311-12. > ----- To be removed from this mailing list, send an email message to listserv@listserv.umkc.edu with the text SIGNOFF DIRT. Please email manager@listserv.umkc.edu if you run into any problems. See for more information.