1.25 Unauthorized Practice of Law

• Library: Real Estate Transactions in Virginia (Virginia CLE) (2019 Ed.)

1.25 UNAUTHORIZED PRACTICE OF LAW

1.2501 In General. Section I(2) of part 6 of the Rules of the Supreme Court of Virginia sets forth the general definition of the practice of law. Unauthorized Practice Rules (UPRs) 6-to 6-6 specify whether particular types of activities by non-lawyers in matters involving real estate constitute the unauthorized practice of law. ²⁷⁴

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In 2019, the Virginia State Bar's Standing Committee on the Unauthorized Practice of Law revised UPR 6, which establishes rules governing the activities that non-lawyers may perform in the context of a real estate closing. The 2002 amendments to UPR 6 conform UPR 6 to changes in the law, in particular the General Assembly's enactment of Title 55, Chapter 27.2 on Real Estate Settlements (RESA) ²⁷⁵ and Chapter 27.3, the Real Estate Settlement Agent Act (RESAA) (now Chapters 9 and 10 of Title 55.1, respectively). ²⁷⁶ Many of the more recent 2019 changes to the rule simplify UPR 6 to condense the understanding. These changes include:

• Non-lawyers may hold themselves out to the public as authorized to close real estate transactions provided that they are registered under Chapter 10 of Title 55.1. ²⁷⁷

• Non-lawyers may not prepare legal instruments affecting the title to real estate, except that a party to the transaction may prepare legal instruments affecting the title to real estate he or she owns; a regular employee may prepare legal instruments for his or her employer; a real estate agent may prepare a contract for the sale of real estate or for a lease, exchange, or option that he or she negotiated as a licensed agent; and a settlement agent registered under Chapter 10 of Title 55.1 may complete form documents and instruments selected by and in accordance with the instructions of the parties to the transaction. ²⁷⁸

• A non-lawyer settlement company may not employ a lawyer on its staff for the purpose of drafting legal instruments for the parties to a transaction and should refer its customer to a lawyer outside the company for those legal services. ²⁷⁹

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• A non-lawyer settlement agent may not give legal advice or advise a customer on how to prepare legal instruments. ²⁸⁰

• A non-lawyer settlement agent registered under Chapter 10 of Title 55.1 may perform activities authorized thereunder. A non-lawyer, whether registered or not, may provide services of a clerical or administrative nature and act as an agent or broker in connection with the issuance of title insurance commitments, binders, or policies. ²⁸¹

• A non-lawyer may perform searches of public land and related records, make abstracts of title (copying salient portions of what the public records show as distinguished from expressing an opinion on the legal consequences of the records), prepare title reports, and to the extent licensed to do so, underwrite for and prepare title insurance commitments or binders and policies. ²⁸²

• A real estate agent, closing agent, lender, or other party interested in a real estate transaction must not disrupt the relationship between an attorney and a client or prevent a lawyer from exercising independent professional judgment by fixing the lawyer's compensation, sharing in fees, prescribing the terms of his or her employment, or attempting to control or direct the lawyer's actions. ²⁸³

• A real estate agent, closing agent, lender, or other party interested in a real estate transaction may refer its customer to a lawyer, provided that (1) the customer first has the opportunity to select a lawyer of his or her own choosing; (2) if the customer does not select a

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	lawyer, the agency provides a list of lawyers from which the customer may make a selection and subsequently authorize the agent to refer the representation of the customer to the lawyer so selected; and (3) the lawyer is free at all times to communicate directly with the client and to establish directly with the client the fee arrangement for the services provided by the lawyer. 284
•	A real estate agent, closing agent, lender, or other party interested in a real estate transaction must not exercise, attempt to exercise, or imply that it has the right to exercise control over the actions of the lawyer in the handling of a transaction. All decisions are to be those of the lawyer acting on behalf of the client. 285
•	A non-lawyer, acting as a settlement agent, is engaged in the unauthorized practice of law if he or she:
	A.	Recommends or urges a course of action to a party to the transaction under circumstances that require the exercise of legal judgment;
	B.	Drafts a legal instrument for a party to the transaction, other than completing form documents selected by and in accordance with the instructions of the parties to the transaction, or selects or assists a party in selecting a form document, if selection or assistance requires the exercise of legal judgment;
	C.	Assists a party to the transaction in completing a legal document, other than a form document selected by and in accordance with the instruction of the parties, if assistance requires the exercise of legal judgment;
	D.	Advises or instructs a party to the transaction about the manner of taking title to the property or the legal consequences of taking title in a particular

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	manner, other than providing a description of the various tenancies recognized under Virginia law;
E.	Attempts to settle or resolve a dispute between the parties to the transaction that requires the exercise of legal judgment in a particular situation;
F.	Explains the legal effect of an item reported as an exception in a title commitment except as necessary to underwrite an insurance policy. However, a licensed title insurer, agency, or agent may explain an underwriting decision to an insured or prospective insured, including providing the reason for the decision;
G.	Provides a legal opinion in response to inquiries regarding rights and obligations under legal documents. However, a layman's description of the purpose or intent of a document does not constitute a legal opinion. 286

1.2502 Matters Not Constituting Unauthorized Practice of Law. The following real estate matters may be performed by a non-lawyer and do not constitute the unauthorized practice of law:

1.	Computation and proration of taxes, insurance, rents, interest, and lien-payoffs;
2.	Disbursement of settlement funds;
3.	Providing escrow service;
4.	Obtaining copies of documents in a chain of title;
5.	Obtaining mechanics' lien waivers;
6.	Ordering a property inspection;
7.	Ordering a survey of property;

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8.	Preparing and recording certificates of release;
9.	Preparing settlement statements and HUD

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