Posted by Michelle/AL on 7/26/08 9:48am
Msg #257012

Attorney Members: I'm Curious

I would like to know the history behind how/when/why GA became an Attorney-Only state with regards to loan closings. At the table, are you representing the Borrower or the Lender/Title Company? How do you think a closing appointment in GA differs from a closing in a non-Attorney state? In your personal opinion, how has this law made things better or worse for Georgia residents? Finally, do you think some (emphasis on the word “some”) of the mortgage industry problems of today are indirectly related to the absence of attorney involvement?

I am asking these questions for personal reasons only. I did use the orange search button and read previous posts on the subject; however, I did not see my questions addressed. You don't have to be from GA to respond. Thank you in advance.

Reply by Linda_H/FL on 7/26/08 10:10am
Msg #257014

http://www.gabar.org/handbook/supreme_court_of_georgia/fao_00-3/

May have to cut and paste - not sure if the link will work - hope this helps a bit..

Reply by Michelle/AL on 7/26/08 11:00am
Msg #257018

Personal Responses

Linda, thanks so much for your reply. The linked worked just fine and this is some of what I was looking for. Good stuff. Still hope to hear from attorneys regarding their pesonal experiences and opinions.

Reply by Linda_H/FL on 7/26/08 11:08am
Msg #257020

I look forward to it too, Michelle, especially since

judging from past posts here it's obviously not being enforced...

Reply by Michelle/AL on 7/26/08 12:05pm
Msg #257035

Linda, you've got to be kidding!

I cannot believe that anyone would take such a chance. Why put yourself at risk of breaking the law and opening yourself up to liability risks (which insurance may not cover since one is breaking the law)? I have received calls from companies asking me to conduct closings in neighboring states (GA and TN) and I simply tell them that my notary commission is limited to the State of AL.

Reply by Linda_H/FL on 7/26/08 12:15pm
Msg #257040

Re: Linda, you've got to be kidding!

Nope..not kidding...there have been several posts here in the past by notaries in GA who do signings...one huge discussion within this past week....several non-attorney notaries in GA do loan signings...that's the facts...

I was discussing this with a company some time ago about GA being attorney-only .. yada .. yada..they say they address that by always having an attorney on the phone during the signing...read the opinion - that doesn't cut it..

Reply by GA/Atty on 7/26/08 11:26am
Msg #257021

Michelle, I had like 3 paragraphs typed, but then I dropped

my cell phone on the keyboard and it all poofed!

I will respond today when I can, though.

Reply by Michelle/AL on 7/26/08 12:06pm
Msg #257037

Thanks GA/ATT, looking forward to it. n/m

Reply by Hugh Nations Signing Agents of Austin on 7/26/08 11:32am
Msg #257023

Don't know about the answer to your question, since I haven't practiced in Georgia for more than a quarter-century.

However, when I left my job as city hall reporter for the Atlanta Journal-Constitution to practice law, I had a lawyer friend who told me: "Nations, you've taken the only possible step downward from being a journalist."

Reply by Michelle/AL on 7/26/08 12:08pm
Msg #257039

Yikes! And I was considering going to law school. n/m

Reply by PAW on 7/26/08 11:59am
Msg #257033

The following is from James R. Kobleur, Esq., Savannah, GA, as posted on his website. He his also a member of NotRot (not Ga/Atty):

[quote]
I am asked, often, (1) Whether Georgia is a "Lawyer Only" State and, if so, (2) whether a lawyer is needed when the borrowers are located in Georgia but the property is in another State. Questions also arise regarding (3) whether a lawyer must conduct the closing in a situation where Georgia real estate is given as security when a loan is closed outside the State.

Most people in the loan industry use the term "Lawyer Only State" to refer to those states which require that a lawyer (as opposed to a Notary or other "Loan Signing Agent" conduct all loan closings in which real property is given as security for the loan, even if the lawyer's role involves only explaining the documents and witnessing the signing of those documents but does not require the lawyer to perform a title search or other activities normally associated with closing a real estate loan. The question arises most often in the context of a Refinancing of an existing loan ("REFI" or the granting of a Home Equity Line of Credit ("HELOC" where the lender has prepared its own loan documents and has obtained a title search from a non-lawyer or from a lawyer other than the person conducting the closing.

Question (1), "Is Georgia a Lawyer Only State?" was answered definitively by the Georgia Supreme Court in November 10, 2003 when it issued a ruling in the case designated: IN RE UPL ADVISORY OPINION 2003-2 (277 Ga. 472). That case held that a so called "Witness-Only" closing may be conducted only by a lawyer in Georgia. The Supreme Court Opinion, with slight formatting changes to increase readability for the lay person, and the UPL (Unauthorized Practice of Law) Opinion from the State Bar on which the Supreme Court Opinion is based, may be read HERE (http://www.kobleur.net/Lawyer_Only2.html).

***Questions (2) and (3) have not been addressed by the Georgia Courts, to the best of my knowledge, and my opinion, expressed below, does not constitute legal advice and should not be relied upon by anyone in making a decision regarding the issues discussed. You should consult your own attorney concerning the state of the law applicable to your particular situation.

Question (2), "Is a lawyer required for a closing when the borrowers are located in Georgia but the real property given as security for the loan is located in a state other than Georgia? It appears that the Supreme Court decision referenced above, although not specifically addressing the question presented, did not limit its Opinion to real property located in Georgia and would clearly require that a lawyer conduct the closing in this situation. The practice of law, as it relates to conveyancing, is an activity unrelated to the location of the property involved. As the Georgia Supreme Court has ruled that the actions of overseeing the closing, reviewing and explaining documents and obtaining signatures constitutes the practice of law in Georgia, the location of the real property is immaterial. It is the actions, in the State of Georgia, of the individual conducting the closing which are subject to Georgia Law, not the property itself. If those actions are conducted in Georgia then it is highly likely that the Court's Opinion applies and a lawyer is required. My only caveat to this position would be a loan closing conducted in Georgia but involving real property located in those states which use Mortgages (or other instruments which merely create a lien against property) as opposed to Security Deeds or Deeds to Secure Debt. Security Deeds and Deeds to Secure Debt, as used in Georgia, actually convey legal title to the property used as security for the loan to the Grantee, the lender, while leaving the Grantor, the borrower, with equitable title. Mortgages, on the other hand create a lien against property used as security for the loan but leave legal title in the landowner, the borrower. Since the rationale of the Supreme Court opinion rests, at least in part, on the fact that only lawyers may prepare and supervise the creation and execution of a "deed of conveyance", the Court might hold that a closing conducted in Georgia but involving a loan secured by a mortgage on real property in another state does not constitute "conveyancing", because of the lack of a "Deed of Conveyance", and thus conducting such a closing might not constitute the practice of law. However, even in this situation, it is more likely that the Court would hold that a mortgage conveys a lien from Mortgagor to Mortgagee and is thus a conveyancing transaction, regardless of the absence of a "Deed of Conveyance".

Question (3), "Is a lawyer required for a loan closing conducted in a state other than Georgia but in which Georgia real property is given as security?" In my opinion, the answer is No. Under our legal system, a State Court's jurisdiction, in most cases, is limited to acts occurring within its geographic boundaries. The Georgia Supreme Court has jurisdiction to define what actions constitute the practice of law in Georgia but that jurisdiction does not extend to acts carried out in other states. Each individual state has the right to define the "Practice of Law" within its boundaries and those states, such as California, which allow notaries to conduct "Witness Only" closings within their boundaries are not bound by the Georgia Supreme Court's Opinion as to what constitutes the practice of law. It is the location of the closing rather than the location of the property which governs whether the closing must be conducted by an attorney.

***Again, I stress that my answers to questions (2) and (3) are only my opinion! You should consult your own attorney concerning the legal status of your actions in those situations.
[/quote]

Reply by Michelle/AL on 7/26/08 12:07pm
Msg #257038

Thank you, PAW. n/m

Reply by Linda Hubbell on 7/26/08 12:16pm
Msg #257041

Paul..that's a great citation..thanks!! n/m

Reply by GA/Atty on 7/26/08 12:50pm
Msg #257044

My answers to your questions

I think the how/when/why question is answered fairly thoroughly by Jim Kobleur's site that PAW linked. I agree with everything he says there.

In a *witness only* closing, we are representing the lender, not the borrower.

The closing appointment itself does not differ much - if at all - from a *witness only* closing in a non-attorney state.

I think the attorney-only rule does give GA borrowers an advantage over borrowers in non-attorney states. GA borrowers (and lenders as well) have a recourse here that they do not have in other states where closings are conducted by non-attorney notaries: they can file a state bar complaint. In my opinion, this gives me more incentive to make sure that everything is done correctly and above-board. I don't stand to lose business by performing poorly; I stand to lose my law license.

Of course the Real Property Section of our state bar also has lobbyists who discourage our legislature from changing this rule by statute. Why? Well, one reason is the one I have stated above - consumer protection for borrowers. But also of course it is a matter of limiting the closing business to lawyers and keeping out competition from non-lawyers.

I have heard it suggested, usually anecdotally, that the attorney-only rule leads to higher closing fees. And although there is some logic to that assumption, I have not seen any real evidence of it. The fees I charge for *witness only* closings is generally not much more than many notaries expect to get in other states (at least according to what I see posted here).

Of course when I do *normal closings* - ie those where I am acting as settlement agent - I charge substantially higher fees because I have a lot more responsibility and work on those. But for the witness closings I do them as cheap as $150 if they are in my office or even my home county.

The problems in the mortgage industry (the foreclosures) have little to do with attorneys non-involvement in the closing process; rather, it has to do with underwriting standards and pressures on loan officers and underwriters to get as many loans closed as possible.

Reply by Michelle/AL on 7/26/08 12:56pm
Msg #257045

Thank you, GA/Atty and everyone else who responded.

My questions have been answered. I appreciate you taking the time - especially during EOM.

Reply by Ernest__CT on 7/26/08 1:26pm
Msg #257050

Thank you, GA/Atty!!! Very helpful! n/m

Reply by Linda Hubbell on 7/26/08 2:33pm
Msg #257053

My question to you GA/Atty

IF..and that's a big IF...someone were to pursue those non-attorney notaries who did signings...what affect, if any, would that have on the loans they closed and/or the mortgages/security instruments they notarized. And what kinds of penalties would those notaries face..

Okay...two questions..<G>

Reply by GA/Atty on 7/26/08 3:15pm
Msg #257059

Unauthorized Practice of Law (UPL) is a misdemeanor

So the max penalty would be $1000 fine and 1 year in jail.


As to what effect it would have on the loan - that is a good question that has not been addressed by our courts as far as I know.

Here is what I would guess, though:

I believe that the security deed (or DoT) - the document that conveys the property interest - would be void. The lender's interest would be unsecured and the borrower's property would be free of the lien that the security deed had supposedly created. So If the borrower defaulted, the lender could not foreclose.

However, the note would still be enforceable as a debt in a court of law. So, if the borrower defaulted on the loan, the lender could sue the boprrower on the note and get a judgement lien against the borrower. And then they could foreclose on that judgement lien. Of course at that point there might be other liens that would be in higher priority.

That is the scenario I think would be most likely.

Reply by Linda_H/FL on 7/26/08 3:26pm
Msg #257061

Thank you very much....

Voided security instruments..ouch...

Reply by MW/VA on 7/27/08 10:56am
Msg #257145

Re: My answers to your questions

Thanks. I especially like the last paragraph of your post. The issues are not with notaries or attorneys who do signings.