• Abstract and Figures
• Public Full-text

PREPARATION OF DOCUMENTS AFFECTING TITLE TO TEXAS REAL PROPERTY AS THE UNAUTHORIZED PRACTICE OF LAW J. ALTON ALSUP, Houston Brown, Fowler & Alsup, P.C. State Bar of Texas 30TH ANNUAL ADVANCED REAL ESTATE LAW COURSE July 10 – 12, 2008 San Antonio CHAPTER 8 Vitae J. ALTON ALSUP Al Alsup is a principal of Houston-based Brown, Fowler & Alsup, a Texas professional corporation engaged exclusively in the practice of mortgage banking and residential real estate law. He is Board Certified in Residential Real Estate Law by the Texas Board of Legal Specialization and is a member of the College of the State Bar of Texas. He is a frequent speaker on residential mortgage lending law and regulations before industry and professional audiences and is the author of numerous published articles on Texas homestead law and federal and state housing finance law. He notably has served on the faculties of the annual Advanced Real Estate Law Course sponsored by the State Bar of Texas and the William W. Gibson, Jr. Mortgage Lending Institute sponsored by The University of Texas School of Law (Chairman 1999). He also was the founding Editor of Texas Mortgage Lending Law & Practices Deskbook, a legal text published by the Texas Mortgage Bankers Association, and he currently serves on the Real Estate Forms Committee of the State Bar of Texas, publisher of the State Bar of Texas Real Estate Forms Manual. He is a graduate of The University of Texas at Austin (B.B.A.) and its School of Law (J.D.) and is a member of the State Bar Associations of Texas and Georgia. He currently serves on the Board of Directors of several trade and professional organizations, including the Texas Association of Mortgage Attorneys, the Texas College of Real Estate Attorneys, and the Texas Mortgage Bankers Association. Preparation of Documents Affecting Title to Texas Real Property as the Unauthorized Practice of Law Chapter 8 TABLE OF CONTENTS I. INTRODUCTION – TEXAS LAW AND PUBLIC POLICY................................................................................ 1 II. BACKGROUND: THE STATE BAR ACT – REGULATING THE PRACTICE OF LAW ................................ 1 A. Inherent Power of the Supreme Court to Regulate the Practice of Law ......................................................... 1 B. Enforcement Through the Unauthorized Practice of Law Committee............................................................ 2 III. DEFINING THE PREPARATION OF LEGAL DOCUMENTS AS THE PRACTICE OF LAW........................ 2 A. Chapter 81 – Rendering of Services Requiring the Use of Legal Skill or Knowledge. .................................. 2 B. Other Statutory Definitions of the Practice of Law are Cumulative ............................................................... 3 C. Inherent Power of the Courts to Define the Practice of Law .......................................................................... 3 IV. THE REACH AND APPLICABILITY OF CHAPTER 83.................................................................................... 4 A. The Statute and its Limited Exceptions........................................................................................................... 4 B. No Exception for Parties to the Real Property Transaction ............................................................................ 4 C. No Exception for Corporate Staff Attorneys................................................................................................... 5 D. The Meaning of “Compensation” for Preparation of Legal Documents......................................................... 6 E. Compensation Not Required to Constitute the Unauthorized Practice of Law under Chapter 81 .................. 6 F. Permissible Charging of Document Preparation Fees to Buyer and Seller for Services of Lender’s Counsel ......................................................................................................................................................... 7 G. Class Actions and Measures of Treble Damages under Chapter 83 ............................................................... 8 V. SUMMARY AND CONCLUSIONS — TEXAS LAW AND ITS PUBLIC BENEFIT........................................ 9 i Preparation of Documents Affecting Title to Texas Real Property as the Unauthorized Practice of Law Chapter 8 PREPARATION OF DOCUMENTS AFFECTING TITLE TO TEXAS REAL PROPERTY AS THE UNAUTHORIZED PRACTICE OF LAW By J. Alton Alsup “I am unable to rest any satisfactory test on the distinction between simple and complex instruments. The most complex are simple to the skilled, and the simplest often trouble the inexperienced.” Chief Justice Alexander of the Texas Supreme Court in Hexter Title & Guaranty Co., Inc. v. Grievance Committee on the issue of whether a layman can engage in the practice of law if it involves only the preparation of simple instruments I. INTRODUCTION – TEXAS LAW AND Texas public policy favors protection of PUBLIC POLICY consumers in their dealings with creditors – Preparation of legal documentation affecting title particularly with respect to transactions secured by the to real property constitutes the practice of law in Texas family homestead. To this end, the Texas Constitution and, with few exceptions, Texas law reserves to establishes the most protective homestead rights in the licensed Texas attorneys the exclusive authority to nation, and the Texas Legislature notably has enacted prepare and charge for such instruments as deeds, aggressive consumer protection legislation that mortgages and deeds of trust, real estate notes, and provides for private actions by consumers and public transfers and releases of liens. enforcement by the Texas Attorney General for the This article examines the relevant body of Texas commission of deceptive trade practices in transactions law supporting this legal conclusion, including the with consumers. Section 83.001 of the Texas applicable statutes, judicial decisions enjoining Government Code, which reserves the authority to unauthorized practices, and attorney general and prepare documents affecting title to real property to professional ethics opinions considering particular licensed Texas attorneys, is a further expression of that practices. Texas regulates the practice of law by public policy and was enacted for the protection of the statute, principally Chapters 81 and 83 of the Texas public against the incompetent or unethical conduct of Government Code, and through the inherent power of unlicensed persons who lack sufficient legal the courts of this state to determine in a proper case knowledge, training, skill, or accountability for the what constitutes the practice of law. While Texas law task. in this regard is uniformly applicable to all commercial and residential real property transactions and to both II. BACKGROUND: THE STATE BAR ACT – first- and subordinate-lien mortgage loan transactions, REGULATING THE PRACTICE OF LAW this article examines the law particularly from the A. Inherent Power of the Supreme Court to perspective of Texas attorneys and their role in Regulate the Practice of Law representing mortgage lenders in connection with the The Supreme Court of Texas has inherent power common but often complex home mortgage loan to regulate the practice of law in Texas for the benefit transaction. and protection of the justice system and the people as a Thousands of such home purchase, refinance, whole. The Supreme Court inherently may determine construction, and equity loans are closed each business as a matter of law on a case-by-case basis whether day throughout the state, requiring the coordinated particular practices constitute the unauthorized practice efforts of the lenders’ attorneys, title insurers and their of law. State Bar of Texas v. Cortez, 692 S.W. 2d 47, agencies and escrow officers, appraisers, surveyors, 51 (Tex. 1985) cert. denied, 474 U.S. 980 (U.S. Tex. casualty, flood, and mortgage insurers, and other Nov. 12, 1985); Crain v. Unauthorized Practice of Law settlement service providers. Texas attorneys generally Committee, 11 S.W.3d 328 (Tex. App. – Houston [1st are responsible for preparing accurate and legally Dist.] 1999) cert. denied, 532 U.S. 1067 (U.S. Tex Jun. sufficient mortgage loan documents for each home 4, 2001). The Supreme Court’s inherent power is loan that comply with lender instructions, loan derived in part from Article II, Section 1 of the Texas program parameters, industry standards, and applicable Constitution, which divides state governmental power federal and state housing finance laws and regulations among three departments, including the Judicial and for delivering originals of the documents to a Department, and has been held to authorize the specified title or other settlement agent in time for Supreme Court to regulate judicial affairs and the scheduled loan closings. Their scope of services in administration of justice in the Judicial Department. some cases may also include closing coordination and Within this authority is the power to regulate the funding responsibilities and post-closing audit of practice of law, as assisted by statute, principally the transaction documents. State Bar Act. Tex. Gov’t. Code Ann., Chapter 81 1 Preparation of Documents Affecting Title to Texas Real Property as the Unauthorized Practice of Law Chapter 8 (Vernon 1988). See In re: Nolo Press/Folk Law, Inc., the court may make a determination as a matter of law 991 S. W. 2d 768 (Tex. 1999) and cases therein cited. whether the complained of activities constitute the The State Bar Act was enacted

Load more

  16

Copy Link