Do you need a real estate attorney to close in North Carolina?

What does the law require?

This page relies on the State Bar’s published reading of the statutes. The State Bar says North Carolina’s unauthorized practice statutes (G.S. 84-2.1 to 84-5) limit the practice of law to active members of the State Bar and to registered professional corporations.

Applying that to closings, Opinion 2002-1 answers the question “May a nonlawyer handle a residential real estate closing?” with a flat “No.” It lists the work that makes up a closing: reviewing the purchase agreement, examining title, applying for title insurance, preparing deeds, deeds of trust and lien waivers, explaining documents, clearing title problems, overseeing signing, recording, disbursing funds, and giving a final title opinion. The opinion says the General Assembly “has determined specifically that only persons who are licensed to practice law in this state may handle most of these functions.”

Two further points from the opinion:

• A title insurance company may issue a policy only after receiving an opinion of title from a licensed North Carolina attorney who is not its employee or agent (G.S. 58-26-1, cited in the opinion).
• An individual acting on their own behalf, and a party with a “primary interest” in the transaction, are outside the rule in some cases (the opinion cites State v. Pledger). That is a narrow exception, not a way around hiring a closing lawyer.

Who conducts a closing in practice?

The Real Estate Commission’s closing guide says the closing “will probably be handled by an attorney chosen by you.” Closing is “completed when the closing attorney records the deed and disburses the funds.” In many deals the same attorney may also represent the lender and the seller, so the Commission tells buyers to know “up front” who the attorney is representing.

You choose the lawyer. The Commission notes that others in the deal may recommend an attorney or offer incentives, but “you have the final word.” The State Bar adds that a title company or other party may refer a borrower to attorneys at the customer’s request, but may not require a specific attorney or charge a fee for the referral.

What can a nonlawyer do?

The State Bar adds that nonlawyer companies “may not advertise or represent” that they will handle the closing or provide the legal services behind it. If a non-attorney runs your signing, the Commission says that person “may render only administrative services related to the transaction, not give you legal advice.”

The State Bar also reports that the conduct of nonlawyers in residential closings is an area of concern, because some “exceed the limitations on their services by drafting legal documents and providing legal advice.”

What does an attorney cost?

Neither the State Bar nor the Real Estate Commission publishes a typical fee, so this page does not give one. What the Commission does say:

• Buyer costs usually include attorney fees, title insurance, recording fees, the appraisal, survey and lender fees.
• Seller costs normally include the payoff of existing loans, commissions, deed preparation, cancelling existing liens and the state’s revenue stamps.
• Paying these fees is “negotiable between the parties” in most transactions. VA and FHA loans may require the seller to pay certain items, such as the pest inspection.

Ask each firm for a written fee quote before you commit. For a full cost breakdown, see closing costs in North Carolina and the closing costs explained guide.

When is a lawyer worth it anyway?

The State Bar’s own view is that “it is in the best interest of a consumer to be represented by a lawyer with respect to all aspects of a residential real estate transaction.” Its reasons:

• Funds protection. Lawyers must handle fiduciary funds properly under the Rules of Professional Conduct. If a lawyer mishandles closing money, the lawyer faces discipline and the State Bar’s Client Security Fund “may provide financial assistance” to the injured person.
• Disbursement timing. Under the Good Funds Settlement Act (G.S. 45A-4, cited in the opinion), funds may not be disbursed until the deed and any deed of trust are recorded. This is why a “dry closing” may leave the seller waiting until the next business day for proceeds.
• Non-standard deeds. The Commission says a quitclaim deed carries no warranties and a special warranty deed only limited ones. If you are offered anything other than a general warranty deed, “immediately consult with your attorney.”
• New or renovated homes. Ask the closing attorney what steps were taken to guard against lien claims by subcontractors.

Protect yourself from wire fraud

The Commission advises that before wiring money, you phone the closing attorney’s office “using a publicly verified phone number” and speak to the attorney or staff. Do not rely on emails, texts or calls claiming to come from the attorney’s office.

How do you report a problem?

The State Bar’s Authorized Practice Committee investigates reports of unauthorized practice. A person damaged by unauthorized practice may also have a private claim under G.S. 84-10, according to the opinion.

Related: seller disclosure in North Carolina, how to verify a license and the title insurance guide.