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South Carolina: State Supreme Court Analyzes “Unauthorized Practice of Law”

Posted By USFN, Tuesday, September 12, 2017
Updated: Monday, August 28, 2017

September 12, 2017


by Ronald Scott and Reginald Corley 

Scott & Corley, P.A. – USFN Member (South Carolina)

Following a long line of cases where the state’s high court has analyzed and interpreted the unauthorized practice of law in real estate-related transactions, the South Carolina Supreme Court recently decided Boone v. Quicken Loans, Inc. (S.C. July 19, 2017).

In Boone, the petitioners (a group of homeowners) alleged that Quicken Loans engaged in the unauthorized practice of law (UPL) in mortgage refinance transactions throughout South Carolina. The Court found that Quicken did not engage in UPL and that South Carolina-licensed attorneys were involved in every critical step of the mortgage loan transactions as required by state law: (1) preparation/review of legal instruments relating to real estate transactions; (2) supervision of title searches; (3) supervision of real estate closings and disbursement of funds; and (4) supervision of the recording of the legal instruments. [See State v. Buyers Service Company, 292 S.C. 426, 430, 357 S.E.2d 15, 17 (1987); Matrix Financial Services Corporation v. Frazer, 394 S.C. 134, 714 S.E.2d 532 (2011).]

Petitioners contended that Quicken engaged in UPL in all four of the above-referenced steps. In each instance, the Court determined that there had been sufficient supervision by a South Carolina-licensed attorney throughout the real estate transaction. Although the title search and certification were not completed by an attorney, the title work and the assembled documents (in their entirety) were reviewed by a South Carolina-licensed attorney prior to issuance of a title commitment or moving forward with the real estate transaction. At the closing, all documents relevant to the refinance mortgage closing were reviewed by an attorney who also stated that he or she had reviewed and explained the documents to the borrowers; answered any questions asked by the borrowers; and supervised the borrowers’ execution of the documents. Finally, with regards to the disbursement of the closing funds, an attorney was involved to ensure that the proper disbursement of the loan proceeds occurred and that the necessary real estate documents were recorded in the correct county’s register of deeds office.

Court’s Analysis and Conclusion
While the Supreme Court could have set a bright-line rule in Boone to say that a South Carolina-licensed attorney is needed at the center of each closing that takes place, carefully overseeing each step, it deliberately did not. The Court continues to recognize that while ‘“South Carolina, like other jurisdictions, limits the practice of law to licensed attorneys’ [quoting Brown v. Coe, 365 S.C. 137, 139, 616 S.E.2d 705, 706 (2005)] … “what constitutes the practice of law must be decided on the facts and in the context of each individual case. [Citations omitted].”

The Court expressly distinguished Boone from Buyers Service (cited above), where there had been a complete lack of attorney involvement throughout the real estate closing process, thus constituting UPL. In the Boone case, the Court said that “… we believe requiring more attorney involvement in cases such as this would belie the Court’s oft-stated assertion that UPL rules exist to protect the public, not lawyers. See, e.g., Crawford, 404 S.C. at 45, 744 S.E.2d at 541 (‘The unauthorized practice of law jurisprudence in South Carolina is driven by the public policy of protecting consumers.’).” The Court continued: “In this context, where there is already ‘a robust regulatory regime and competent non-attorney professionals,’ [citing Crawford at 47] we do not believe requiring more attorney involvement would appreciably benefit the public or justify the concomitant increase in costs and reduction in consumer choice or access to affordable legal services.”

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