Posted by Hugh Nations Signing Agents of Austin on 6/27/04 10:16am
Msg #3582

Non-compete agreements

A while back the subject of non-compete agreements came up. Almost all contracts with signing companies seek to bind notaries to an agreement that they will not pirate any business away from the signing company.

The law doesn't like non-compete agreements; it just doesn't like to interfere with a person's ability to earn a living. Nevertheless, there is a legitimate concern -- many would say need -- that non-compete agreements are a necessary means for a company to protect itself from unscrupulous employees or associates who would learn of its clientele through affiliation with the company, then steal those clients. So, the law seeks to restrict the impact of such agreements to give companies some protection, but permit the company's exes to continue to put food on the table.

What brought this to mind was a signing company contract I just read on the web that restricted a signing agent from soliciting the company's clients for two years. That's a ridiculous restriction, and most likely would be disallowed in any state in the union. And, the general rule is that if part of a non-compete agreement falls, it all falls.

Like most, I started out as a signing agent by using signing companies. I'm now soliciting and being solicited by title companies. The rule I have adopted in going to title companies is that if they are in my local phone book, I reserve the right to solicit them irrespective of whether I first served the title company through an assignment from a signing company. I haven't confronted the need for this approach yet, but I think that I would also be comfortable approaching any signing company that came up on a Google search, like maybe "Texas title companies." Employing those criteria, you are not using information gleaned from the signing company to build your database of prospective clients; you came across the title company through means entirely outside your relationship with the signing company.

If there is a title company I want to solicit, and I served that title company through a signing company referral, I simply wait six months and then approach the title company. Six months seems to be the reasonable threshhold enforced by most courts.

I don't think that a direct solicitation from a title company, short-circuiting the signing company, is necessarily a defense to enforcement of a non-compete clause. Remember, the title company learned of >>you<< through the signing company.

All of this is probably so much surplus verbiage, though, because they are going to be flinging snowballs in Hell before most signing companies have the resolve or the resources to sue over a non-compete agreement violation. I suspect, if you are so inclined, you could solicit all you wish without any ramifications except some ruffled tempers.

Hope this helps.

Reply by Sylvia_FL on 6/27/04 10:43am
Msg #3584

Well said Hugh!!!

The way I looked at it when I got started in the days of NASA (National Association of Signing Agents) was I had paid for my membership there, and one of the benefits of the membership was access to a company listing.
And I had the right to contact those companies whether I had worked for them through a signing service or not.

Reply by Dennis D Broadbooks on 6/27/04 4:30pm
Msg #3594

Well Stated...

...& coming from an attorney, it carries the weight of authority. Moving on to another closely related subject...if you have the time & inclination, Hugh, I'd like to send you a copy of a disclaimer agreement I utilize with borrowers prior to every signing. It's one I created after consultation with my own private attorney. He's given his blessings on it with a few corrections/additions; but then he's not spent a lot of time in the signing industry as you have. This may or may not be something you can even consider, but I'd like to know if you can give it a quick once over & provide me with your professional (or layman's feedback as a signing agent) opinion. Should you desire monetary compensation for your efforts, I'm more than willing to pay the going rate for such legal services.

Reply by HisHughness on 6/27/04 4:44pm
Msg #3595

Re: Well Stated...

I'll be happy to look at it, Dennis, for what little my opinion would be worth. I haven't practiced law since Ronald Reagan's first term.

Reply by sue on 6/27/04 7:26pm
Msg #3602

when I started out that I signed many noncompetes with signing services. I no longer work for any of those services. I work directly for title companies now with a signing service thrown in for fun now and then. Several years ago I had my attorney write a letter to every signing service I could find that I had signed a noncompete with and informed them the contract was cancelled pursuant to the terms (most I believe were 30 days). My concern wasn't that a signing service would come after me but that perhaps some day some bankruptcy trustee for one of these bozo companies would make a stink. as you say, most of these aren't enforceable but I didn't want to be on the defendant side of litigating that.

Sylvia, remember that one FL company a while ago had a clause that said if you violated their noncompete you owed them $10,000? I forget their name but I always wondered if anyone actually signed that.

Reply by Sylvia_FL on 6/27/04 8:06pm
Msg #3604

I remember hearing about that $10,00 non-compete, but can't remember who it was.
I doubt if it would have been upheld.