A practice that is becoming common-place around the country is referred to as "Witness Only Closings". These closings are attended by an attorney who is solely at the closing to act as a witness and to notarize documents. A number of states, most recently Georgia, are finding that the actions of the attorney are in fact unethical. The attorney is there only to act as a figurehead and lend credibility to the closing and is not involved from start to finish in any aspect of the real estate closing. The reason behind the witness only closing poractice is simple, the buyer / borrower saves money. However, the buyer / borrower may spend more money in the long run when he is faced with a problem down the road that could have otherwise been avoided if the buyer / borrower had been represented by counsel at the closing.
The attorneys are being accused of misrepresentation by showing up at a closing with no intention of
doing anything more than acting as a witness and notarizing documents. Of course misrepresentation by an attorney is unethical conduct and is punishable by anything from a slap on the wrist to disbarrment or suspension. In these "witness only closings", documents are prepared by the lender and sent to the attorney along with a set of closing instructions. Some lenders go so far as to warn the attorney not to review the documents or explain them to the borrower, or otherwise render any legal advice to anyone at the closing table. The Georgia Supreme Court stated that, "a lawyer’s failure to review closing documents can facilitate foreclosure fraud, problems with title and other errors that may not be detected until the owner attempts to refinance, sell or convey the property".
A related problem involves situations where lenders hire notaries to conduct the closing of a loan, without a lawyer being involved or present in any manner whatsoever. Practice Book Section 2-44A of the Connecticut Rules of the Superior Court indicates that conducting a real estate closing is the practicing law in the State of CT. The U.S. District Court for the Northern District of West Virginia, in the case of Dijkstra v. Carenbauer, et al. in fact found a notary guilty of the unauthorized practice of law for handling a real estate closing without the supervision of an attorney.
These measures by lenders are designed to save the buyer / boirrower money and to otherwise expedite the closing process. We all know that when an attorney is involved, things will not go smoothly, problems will be created and things will be delayed, RIGHT??
I can think of more instances where the buyer / borrower was glad to have representation at the closing than not. It is absolutely imperative, IMHO, for both buyer and seller to have their attorney at the closing to represent and protect their interests. Cutting corners by lenders in an effort to save money and time should not be tolerated and should be reported to the appropriate authority. I hope you will join the effort to stop these unethical and illegal practices in real estate closings.
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