the misadventures of weather boy: March 2007

Friday, March 23, 2007

S764 - Good thing or bad thing?

I received an email that was requesting opposition for S 764. The bill would reverse an opinion of the NC Bar that allows a nonlawyer to collect money at closing and to instruct them where to sign (i.e., likely a notary public), and would mandate that "only attorneys should be permitted to provide loan closing or settlement services."

My first impression is that I actually agree with this legislation. It keeps notaries out of danger of violating two elements of G.S. Chapter 10B. The first element is G.S. 10B-20(k):

A notary public who is not an attorney licensed to practice law in this State is prohibited from rendering any service that constitutes the unauthorized practice of law. A nonattorney notary shall not assist another person in drafting, completing, selecting, or understanding a record or transaction requiring a notarial act.

A nonattorney notary is in an extreme bind at a real estate closing. If the buyer wants clarification on the closing documents, the notary may feel that (s)he should answer some of the questions of the buyer. But to offer such advise at a real estate closing would be definitively a practice of law, and that's what gets you hard time folks. It's not a fun situation to be in (see 6 Not. Pub. Guidebook __).

The other problem is the issue of money. For notarial acts, G.S. 10B-31 sets the maximum fee at $5. And in addition, G.S. 10B-20(c)(6) notes that:

[The notary act shall not proceed if] ... [t]he notary will receive directly from a transaction connected with the notarial act any commission, fee, advantage, right, title, interest, cash, property, or other consideration exceeding in value the fees specified in G.S. 10B‑31, other than fees or other consideration paid for services rendered by a licensed attorney, a licensed real estate broker or salesperson, a motor vehicle dealer, or a banker.

Most notaries in this situation I am considering are not attorneys, real estate brokers, auto dealers, or bankers. But often notaries take a decent sum of money for helping to execute the closing. And yet a strict interpretation of these two provisions would indicate that the notary could not do this (see 6 Not. Pub. Guidebook _).

On the other hand, it can be argued that a notary in this position will know what they are getting into, and it should be the customer's choice (it sure ain't free to have a closing with a lawyer present, that's for sure!). But there is a reason why there should be an attorney present--to look after the fiduciary interests of the buyer at the closing in an extremely complex legal situation. The notary, in his official capacity (unless (s)he also happens to be an attorney), cannot do this. And in my opinion, it isn't worth losing your commission and going to jail to satisfy someone.

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Labels: law