Do you need a real estate attorney to close in Minnesota?

What does the law require?

The texts I read do not say that a buyer or seller must hire an attorney. Section 507.45, subdivision 1, names four kinds of people who may provide residential closing services and charge for them:

• a licensed attorney;
• a real estate broker;
• a real estate salesperson;
• a licensed real estate closing agent.

The law also protects your right to choose. Under § 507.45, subd. 4, no salesperson, broker, attorney, builder, title agent, financial institution or lender may require you to use a particular closer. Chapter 82 repeats this for licensees: they may not require you to use any particular lender, attorney, broker, closing agent or title insurance agent (§ 82.81, subd. 8). A listing agreement must include a notice of this right, and the seller must say in writing whether the agent may arrange the closing.

Who runs the closing in practice?

The law defines a closing agent as anyone who provides closing services for another person, including drawing or helping to draw the papers for the sale, trade, lease or loan of residential real estate (§ 82.55, subd. 4). The state requires a license to act as one, issued by the Department of Commerce (§ 82.641). The license application requires eight hours of approved instruction, and the initial license fee is $85 (§ 82.57).

Some people are exempt from that license when they act as closing agents. They include:

• a licensed attorney and the attorney’s direct employees;
• a licensed broker or salesperson;
• a title insurer and its direct employees;
• a title insurance agent that has a contract with a title insurer that takes responsibility for the agent’s acts;
• banks, credit unions and similar regulated lenders acting within their powers.

Which of these runs your closing depends on who your lender, agent or title company uses. The statutes do not pick one for you.

Can non-lawyers prepare closing papers?

Minnesota’s unauthorized-practice law is broad, but it has exceptions that matter in a sale:

• Anyone may draw deeds, mortgages, notes, leases, bills of sale, satisfactions and other conveyances, with or without a fee, except wills and trusts (§ 481.02, subd. 3(8)).
• A real estate broker, salesperson or closing agent may draw, or help draw, papers for a sale, trade, lease or loan, and may charge for it (§ 481.02, subd. 3a).

There is a limit built into the closing law. If a broker, salesperson or closing agent provides the closing, the written contract for closing services must state, in at least 10-point type, that this person has not and, under state law, may not give opinions on the legal effect of the closing documents or of the closing itself (§ 507.45, subd. 3(a)). That is the gap a lawyer fills.

The law also requires some protection of title. When a broker, salesperson or closing agent provides the closing, no closing fee may be charged for a transfer of ownership unless the closing has either a mortgagee’s or owner’s title insurance commitment or a legal opinion on the status of title (§ 507.45, subd. 3(b)). See title insurance explained.

Foreclosure is different. A fee for foreclosing a mortgage may be charged only if a Minnesota-licensed attorney conducts the foreclosure and keeps the full fee (§ 481.02, subd. 4). See foreclosure in Minnesota.

What does closing help cost?

The statutes I read set no fee schedule for attorneys or closing agents, and I did not find an official source that gives a typical fee. Costs depend on the provider, the work done and whether a title search or title commitment is included.

What the law does fix is disclosure. A closing agent may not charge for closing services unless the person to be charged is told in writing at least five business days before closing (§ 507.45, subd. 2). Charges already shown under Regulation Z, or in an estimate given under the federal Real Estate Settlement Procedures Act, are excepted. Chapter 82 adds that a closing agent may not charge a borrower a fee that was not disclosed in writing at least one business day before settlement, and that this is met by a disclosure made under § 507.45 (§ 82.70, subd. 6).

To compare offers, ask each provider for its fee in writing. The Loan Estimate and Closing Disclosure lines are covered in closing costs in Minnesota and closing costs explained.

When is an attorney worth it anyway?

The law does not say when you need one, so this is a judgment call. An attorney is the only closer who can give a legal opinion about your documents. You may want one to review the purchase agreement, a title problem, a contract for deed, an estate or divorce sale, or a dispute with the seller. A licensed attorney can also advise you on a specific case; this article cannot.