State court rules attorneys must participate in home closings

By Jenifer McKim, Globe Staff

The Massachusetts Supreme Judicial Court today released a ruling requiring the "substantive participation" of attorneys in real estate transactions in a long-awaited decision celebrated by local lawyers.

The state's top court addressed issues prompted by a high-stakes turf battle between local real estate attorneys and a Pennsylvania-based real-estate services company over what constitutes the practice of law in residential home closings.

Supporters of the ruling say it is good for local attorneys and homeowners who often are making one of the most important financial decisions of their lives.

"The interests of private clients and the public alike are safeguarded when an attorney participates in real estate conveyancing,” said Martin W. Healy, chief legal counsel of the Massachusetts Bar Association.

The dispute began in 2006 when the Real Estate Bar Association for Massachusetts filed suit against National Real Estate Information Services, claiming some of its practices constitutes, "the unauthorized practice of law." The company provides services to mortgage lenders, including title examinations, the disbursement of settlement funds and drafting federal housing documents.

In 2009, a US District Court judge found in favor of the Pennsylvania company and ordered the local real estate bar to pay nearly $1 million in fees and costs. Last year, the 1st United States Circuit Court of Appeals vacated the decision and sent clarifying questions to the Supreme Judicial Court for consideration.

The top court ruled unanimously that some of the services provided by National Real Estate Information Services are lawful, including title examinations and the preparation of mortgage-related forms. But overall, justices found that real-estate closings require, "Not only the presence but the substantive participation of an attorney on behalf of the mortgage lender."

Local real estate attorney Richard Vetstein said the decision creates a barrier for out-of-state companies interested in coming into Massachusetts and taking over local closings at bargain-basement prices.

"The threat was we were going to be outsourced,'' said Vetstein who authors a local blog about real estate.”It reaffirms Massachusetts attorneys long standing involvement in residential real estate transactions."

Michael D. Ricciuti, an attorney for National Real Estate Information Services, declined to comment.