Is a real estate attorney required at closing in Texas?

Who actually runs a Texas closing?

In Texas, the closing usually takes place at a title company. The Insurance Code defines “closing the transaction” as the work done for a title insurer or agent before the policy is issued, to confirm that deeds, mortgage papers and other instruments are properly signed, acknowledged and delivered (§ 2501.006). It includes checking that:

• all delinquent taxes have been paid;
• current taxes have been prorated between buyer and seller (for an owner’s policy);
• the purchase money has changed hands and all proceeds have been properly paid out;
• a final title search has been made;
• all necessary papers have been filed for record.

The people who do this work are licensed by TDI:

Every title agent must have its trust fund accounts audited each year by an outside CPA and send the report to TDI, and TDI’s own auditors check that escrow funds “are being handled only by licensed escrow officers.” You can find the licensed agents and escrow officers through TDI’s public reports. Our title insurance page covers the premium, which TDI sets for the whole state.

Where the line is drawn: the practice of law

Government Code § 81.101 defines the practice of law broadly. It includes giving legal advice and “preparing a will, contract, or other instrument, the legal effect of which under the facts and conclusions involved must be carefully determined.” Under § 81.102, only members of the State Bar may practice law in Texas.

Real estate agents are therefore limited by statute and by rule:

• Occupations Code § 1101.654: TREC must suspend or revoke the license of a non-attorney agent who, for pay, drafts an instrument transferring an interest in real property (other than an approved contract form) or advises someone on the validity of an instrument or of title.
• The same section says filling in a TREC-adopted contract form, incidental to acting as a broker, is not the unauthorized practice of law.
• TREC rule 22 TAC § 537.11: agents must use TREC’s mandatory contract forms, such as the One to Four Family Residential Contract (Resale), TREC No. 20-19. They may not give legal advice, give opinions on the validity of title, or draft clauses that define the parties’ rights, “including escalation, appraisal, or contingency clauses.”
• The same rule forbids an agent to “discourage any principal to a real estate transaction from employing an attorney.” When a deal “involves unusual matters that should be reviewed by an attorney,” or when an instrument must be acknowledged and recorded, the agent must advise the client to consult a lawyer before signing.

In short, the standard contract and the closing can go ahead without an attorney. Anything outside the standard forms is legal work.

When a lawyer is worth hiring

TDI’s own consumer guidance points to a lawyer at two moments: reviewing the title commitment (“You may want to review potential issues with a lawyer”) and attending the closing. Other situations where a lawyer can help:

• Non-standard terms that a TREC form does not cover: seller financing, a lease-back that goes beyond TREC’s temporary lease forms, or special clauses an agent may not draft under § 537.11.
• Title problems listed in Schedule B of the commitment, such as liens, easements or a gap in the chain of title.
• For-sale-by-owner deals with no agent, where nobody else is checking the contract.
• Estates, divorces and heirship: selling a house inherited without probate, or one divided in a divorce. See our page on community property.
• Home equity loans: the Texas Constitution (art. XVI, § 50(a)(6)(N)) requires a home equity loan to be closed “only at the office of the lender, an attorney at law, or a title company.”
• Disputes over earnest money (see our earnest money guide), repairs or the seller’s disclosure.