FTC/DOJ Submit Letter to Supreme Court of South Carolina on Proposed Guidelines Regarding the Practice of Law in Real Estate Transactions

The Federal Trade Commission and the Department of Justice have submitted a joint letter to the Supreme Court of South Carolina regarding proposed guidelines related to the practice of law involving real estate transactions. The proposed guidelines would specify several tasks that must be performed by an attorney, including performing all title work, preparing deeds, overseeing the drafting of documents pertinent to the loan closing, supervising the closing, and disbursing all funds related to the transaction, as well as performing title work and preparing deeds for a home equity line of credit.

As the letter explains, the FTC and the DOJ believe that consumers receive the greatest benefit when non-attorneys compete with attorneys except in circumstances where specialized legal knowledge and training has been demonstrated to be necessary to protect consumers’ interests. South Carolina is among a small minority of states that restrict non-attorneys from performing services related to real estate transactions. The available empirical evidence, however, shows that without competition from non-attorneys, consumers in these states pay higher prices to settle real estate transactions than consumers in other states. The letter notes that because there is no evidence that non-attorneys provide lower quality services than attorneys, restrictions on competition do not appear to provide consumers with any countervailing benefits.

The FTC and DOJ also encourage the South Carolina Supreme Court to consider less restrictive alternatives than a complete ban on non-attorneys to protect consumers of real estate settlement services.

The FTC vote approving submission of the letter was 4-0. The letter was transmitted to the Supreme Court of South Carolina on April 15, 2008. Copies of the letter can be found as a link to this press release on the Commission’s Web site. (FTC File No. V080010; the staff contact is Gustav Chiarello, 202-326-2633)