SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
NO. 96-2746

MASSACHUSETTS CONVEYANCERS
ASSOCIATION, INC., et al.,
Plaintiffs,
v.
COLONIAL TITLE & ESCROW, INC., et al.,

Defendants.

PROPOSED JUDGMENT

1. Plaintiffs Massachusetts Conveyancers Association, Inc., Massachusetts Association of Bank Counsel, Inc., Bristol County Bar Association, Fall River Bar Association, Bar Association of Norfolk County, Plymouth County Bar Association, Taunton Bar Association and Worcester County Bar Association, are duly organized bar associations existing under the laws of the Commonwealth of Massachusetts. As bar associations, plaintiffs have standing pursuant to General Laws Chapter 221, § 46B to petition this Court to restrain violations of General Laws Chapter 221, §§ 46, 46A.

2. Defendant Colonial Title & Escrow, Inc., a Rhode Island corporation, was organized on or about September 23, 1992. Defendant Colonial Title & Escrow, Inc., a Massachusetts corporation was organized on or about March 16, 1994. Both the Rhode Island corporation and the Massachusetts corporation have a principle place of business at 132 Central Street, Foxboro, Massachusetts. There is no distinction made to members of the general public or to lenders between the Rhode Island corporation and the Massachusetts corporation. Both corporations were organized to conduct real estate title examinations, escrow, document retrieval, settlement, recording and other related services, as well as to issue title insurance as title insurance agents. Hereinafter, these corporations are referred to collectively as "Colonial Title."
3. Conveyancing, which is a short-hand way for referring to the various functions relating to the creation, transfer or termination of an interest in real property, constitutes the practice of law. Opinion of the Justices, 289 Mass. 607, 613 (1934); Massachusetts Association of Bank Counsel, Inc. v. Closings, Ltd., (Suffolk Superior Court, C.A. No. 90-3053-C, August 30, 1993). See also In re Burton L. Schafer, No. 88-21BD (Jan. 17, 1991) (Wilkins, J.) (activities which include delivering deed, reviewing computations of closing figures, and making telephone calls to locate missing mortgage discharge, constituted practice of law); Coffee County Abstract and Title Co. v. State ex rel. Norwood, 445 So.2d 852 (Ala. 1983); State Bar of Ariz. V. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961), reheard, 91 Ariz. 293, 371 P.2d 1020 (1962); Florida Bar v. Irizarry, 268 So.2d 377 (Fla. 1972); Regas v. Continental Casualty Co., 139 Ill. App. 3d 45 (1985); State v. Buyers Service Co., 357 S.E.2d 15 (S.C. 1987); Bowers v. Transamerica Title Ins. Co., 100 Wash.2d 581 (1983).
4. The practice of conveyancing necessarily involves judgments as to rights and obligations of others under the law. Therefore, it is in the public interest that conveyancing be performed only by persons who have been trained in the law, who have demonstrated a proficiency in the law by passing the bar entrance examination, who have been licensed by the Commonwealth, and who remain subject to the continuing oversight of the Board of Bar Overseers and the jurisdiction of the Courts of the Commonwealth.

5. Since conveyancing encompasses all of the functions relating to the creation, transfer, or termination of an interest in real property, the tasks involved are necessarily case-specific and cannot be codified. E.g., Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 180 (1943) (formulating a comprehensive definition of the practice of law is "not easy"). Without attempting to catalogue these functions, they include the following:

(a) an evaluation of title to the real estate to determine whether the interest being created, transferred or terminated is valid and complies with the parties' obligations under their agreements. See Opinion of the Justices, 289 Mass. 607, 615 (1935) (practice of law includes the examination of real estate records in order to assess the legal validity of those documents and of title); In re Behenna, 92-72BD (Jan. 19. 1993) (O'Connor, J.) ("title examination, even without the rendering of advice, would constitute the practice of law"); In re James M. Oates, No. 81-11BD (Aug. 6, 1986) (Liacos, J.) ("[T]itle searching is commonly perceived by the general public to be a pursuit, if not exclusively within the realm of the legal profession, closely associated with it");

(b) the collection, drafting and review of various legal documents that affect the title to the real estate (including deeds, easements, restrictions, covenants, mortgages, instruments releasing encumbrances of record, or other documents granting rights that have binding legal effect) or impact the parties' obligations under their agreements. See Freitas v. Freitas, 349 Mass. 276 (1965) (preparation of deed by real estate broker constitutes the unauthorized practice of law); Matter of Shoe Mfrs. Protective Ass'n Inc., 295 Mass. 369, 372 (1936) (corporation which completes legal documents for others in the course of conducting its collection business engages in the unauthorized practice of law); Calvert v. K. Hovnanian at Galloway, VI, Inc., 607 A.2d 156, 162 (N.J. 1992) (licensed real estate broker was engaged in the unauthorized practice of law by filling in the purchase agreement and other conveyance forms); Kentucky State Bar Ass'n v. Tussey, 476 S.W.2d 177 (Ky. 1972) (preparation of real estate mortgages by lay-persons constituted the unlawful practice of law); State Bar of Arizona v. Arizona Land Title and Trust Co., 90 Ariz. 76, 366 P.2d 1 (1961), reheard, 91 Ariz. 293, 371 P.2d 1020 (Ariz. 1961) (non-lawyers may not prepare deeds or conveyances relating to land in which they do not hold absolute or equitable ownership); People v. Sipper, 61 Cal. App. 2d Supp. 844, 142 P.2d 960 (1943) (unauthorized practice of law found when a real estate broker prepared for a fee a document to secure a loan with real property);

(c) an explanation at the closing of documents concerning the interest in the real estate being created, transferred, or terminated, or the parties' agreements, and a description of the legal significance of any such document. See Goldblatt v. Corporation Counsel of Boston, 360 Mass. 660, 665 (1971) (in reviewing a Civil Service Commission appointment, the Court observed under Section 46 that "[o]nly an attorney may advise as to the legal 'validity' of tax titles"); and

(d) ensuring at the closing or otherwise that the creation, transfer, or termination of the legal interest in the real estate occurs in accordance with the intent of the parties' agreements, including the conveyance of the interest in the real estate, the disbursement of the purchase money, mortgage loan proceeds or other consideration for the interest, and the execution, exchange and recording of documents affecting the legal rights of the parties; and

(e) the issuance of a title certification and/or a policy of title insurance, both of which are premised upon an evaluation of title to the real estate and are incidental to the conveyance of the legal interest in the property. See General Laws Chapter 93, § 70 (requiring an attorney to render a certification of title to mortgaged premises under certain conditions); United States v. City of Flint, 346 F. Supp. 1282, 1286 (E.D. Mich. 1972) (title insurance is "predicated upon careful examination of the muniments of title, an exhaustive study of the applicable law and the exercise of expert contract draftsmanship . . . . the existence of title defects will depend upon legal doctrines and judicial interpretations of various applicable statutes"); Beach Abstract & Guaranty Co. v. Bar Association, 230 Ark. 494, 326 S.W.2d 900 (1959) (title insurance agent who reviewed title abstract to determine state of title was illegally practicing law); McLaughlin v. Attorneys' Title Guaranty Fund, 61 Ill. App. 3d 911, 915-16, 378 N.E.2d 355, 359, 18 Ill. Dec. 891 (1978).

6. Colonial Title holds itself out to lenders and members of the public as capable of performing the functions listed above and any other functions required to convey an interest in real estate. Lenders and members of the public are encouraged to and do rely on Colonial Title to provide conveyancing services and to render legal advice on all aspects of such real estate transactions.

7. By providing such conveyancing services for one or more parties to a transaction, Colonial Title is engaged in the unauthorized practice of law in violation of General Laws Chapter 221, §§ 46 and 46A.
8. In connection with loans provided to homebuyers and homeowners by mortgage lenders, Colonial Title is retained by the lenders to ensure that the real property interest at stake is validly conveyed and that the lenders' legal interests in the transaction are perfected and protected. Consequently, while some of the individual activities required to complete the conveyance and protect the lenders' legal interests may be performed by non-attorneys, they must be performed under the direct control and supervision of an attorney charged with this responsibility and cannot be performed by a non-attorney corporation such as Colonial Title or through its employees, whether they be attorneys or not.
9. Colonial Title may not perform conveyancing services indirectly by engaging attorneys or others to perform such services for the benefit of Colonial Title or for the benefit of one or more of the parties to the transaction. Joffe v. Wilson, 381 Mass. 47, 52-53 (1980) ("lawyer should be free of direction by a third [party]"); People ex. Rel. Los Angeles Bar Ass'n v. California Protective Corp., 76 Cal. App. 354, 360(1926) (corporation that contracted with patrons to furnish legal services for a fee was engaged in unlawful practice of law). A direct attorney-client relationship must exist to ensure that the attorney exercises his judgment independently. This is not possible where the attorney is employed or retained by Colonial Title, is its agent and subject to its control and direction, and has no direct relationship with any party to the transaction.

JUDGMENT is accordingly entered declaring the acts of defendant Colonial Title & Escrow, Inc., a Massachusetts corporation and defendant Colonial Title & Escrow, Inc., a Rhode Island corporation as constituting the unauthorized practice of law in violation of Massachusetts General Laws Chapter 221, §§ 46, 46A; and permanently enjoining and restraining defendant Colonial Title & Escrow, Inc. a Massachusetts corporation, and defendant Colonial Title & Escrow, Inc. a Rhode Island corporation from the practice of real estate conveyancing and real estate closings in Massachusetts and restraining defendant Colonial Title & Escrow, Inc. a Massachusetts corporation and defendant Colonial Title & Escrow, Inc. a Rhode Island corporation, from holding themselves out to the public as able to perform such services.
The Counterclaims and Third Party Complaint are hereby dismissed with prejudice.

S. Jane Haggerty, J.
Associate Justice, Superior Court

Dated: