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I am asked, often, (1) Whether Georgia is a "Lawyer Only" State and, if so, (2) whether a lawyer is needed when the
borrowers are located in Georgia but the property is in another State. Questions also arise regarding (3) whether a
lawyer must conduct the closing in a situation where Georgia real estate is given as security when a loan is closed
outside the State and (4) Is a lawyer required to disburse funds for a „witness-only‟ or „limited service‟ closing
conducted in Georgia?
Most people in the loan industry use the term "Lawyer Only State" to refer to those states which require that a lawyer
(as opposed to a Notary or other "Loan Signing Agent") conduct all loan closings in which real property is given as
security for the loan, even if the lawyer's role involves only explaining the documents and witnessing the signing of
those documents but does not require the lawyer to perform a title search or other activities normally associated with
closing a real estate loan. The question arises most often in the context of a Refinancing of an existing loan ("REFI")
or the granting of a Home Equity Line of Credit ("HELOC") where the lender has prepared its own loan documents
and has obtained a title search from a non-lawyer or from a lawyer other than the person conducting the closing.
Question (1), "Is Georgia a Lawyer Only State?" was answered definitively by the Georgia Supreme Court in
November 10, 2003 when it issued a ruling in the case designated: IN RE UPL ADVISORY OPINION 2003-2 (277 Ga.
472). That case held that a so called "Witness-Only" closing may be conducted only by a lawyer in Georgia. The
Supreme Court Opinion, with slight formatting changes to increase readability for the lay person, and the UPL
(Unauthorized Practice of Law) Opinion from the State Bar on which the Supreme Court Opinion is based, may be
read HERE.
Questions (2) and (3) have not been addressed by the Georgia Courts, to the best of my knowledge, and
my opinion, expressed below, does not constitute legal advice and should not be relied upon by anyone
in making a decision regarding the issues discussed. You should consult your own attorney concerning
the state of the law applicable to your particular situation.
Question (2), "Is a lawyer required for a closing when the borrowers are located in Georgia but the real property
given as security for the loan is located in a state other than Georgia? It appears that the Supreme Court decision
referenced above, although not specifically addressing the question presented, did not limit its Opinion to real
property located in Georgia and would clearly require that a lawyer conduct the closing in this situation. The practice
of law, as it relates to conveyancing, is an activity unrelated to the location of the property involved. As the Georgia
Supreme Court has ruled that the actions of overseeing the closing, reviewing and explaining documents and
obtaining signatures constitutes the practice of law in Georgia, the location of the real property is immaterial. It is the
actions, in the State of Georgia, of the individual conducting the closing which are subject to Georgia Law, not the
property itself. If those actions are conducted in Georgia then it is highly likely that the Court's Opinion applies and a
lawyer is required. My only caveat to this position would be a loan closing conducted in Georgia but involving real
property located in those states which use Mortgages (or other instruments which merely create a lien against
property) as opposed to Security Deeds or Deeds to Secure Debt. Security Deeds and Deeds to Secure Debt, as
used in Georgia, actually convey legal title to the property used as security for the loan to the Grantee, the lender,
while leaving the Grantor, the borrower, with equitable title. Mortgages, on the other hand create a lien against
property used as security for the loan but leave legal title in the landowner, the borrower. Since the rationale of the
Supreme Court opinion rests, at least in part, on the fact that only lawyers may prepare and supervise the creation
and execution of a "deed of conveyance", the Court might hold that a closing conducted in Georgia but involving a
loan secured by a mortgage on real property in another state does not constitute "conveyancing", because of the
lack of a "Deed of Conveyance", and thus conducting such a closing might not constitute the practice of law.
However, even in this situation, it is more likely that the Court would hold that a mortgage conveys a lien from
Mortgagor to Mortgagee and is thus a conveyancing transaction, regardless of the absence of a "Deed of
Conveyance".
Question (3), "Is a lawyer required for a loan closing conducted in a state other than Georgia but in which Georgia
real property is given as security?" In my opinion, the answer is No. Under our legal system, a State Court's
jurisdiction, in most cases, is limited to acts occurring within its geographic boundaries. The Georgia Supreme Court
has jurisdiction to define what actions constitute the practice of law in Georgia but that jurisdiction does not extend to
acts carried out in other states. Each individual state has the right to define the "Practice of Law" within its boundaries
and those states, such as California, which allow notaries to conduct "Witness Only" closings within their boundaries
are not bound by the Georgia Supreme Court's Opinion as to what constitutes the practice of law. It is the location of
the closing rather than the location of the property which governs whether the closing must be conducted by an
attorney.
Again, I stress that my answers to questions (2) and (3) are only my opinion! You should consult your own
attorney concerning the legal status of your actions in those situations.
Question (4), "Is a lawyer required to disburse funds for a „witness-only‟ or „limited service‟ closing conducted in
Georgia?”
Again, in my opinion, the answer is no. There is considerable difference of opinion within the State Bar on this issue.
Most lawyers who take the position that a “closing attorney”, including an attorney acting as closing agent on a
witness-only closing, is required to issue the checks for that closing rely on Formal Advisory Opinion 04-1 (hereafter
FAO 04-1) of the State Bar and on the Supreme Court of Georgia opinion “S05U1720. Formal Advisory Opinion 04-1”
(hereafter S05U1720), decided February 13, 2006, which affirmed FAO 04-1.
In FAO 04-1 the Question Presented was:
May a lawyer participate in a non-lawyer entity created by the lawyer for the purpose of conducting residential real
estate closings where the closing proceeds received by the entity are deposited in a non IOLTA interest bearing bank
trust account rather than an IOLTA account? (Emphasis added)
The Summary Answer to the Question Presented in FAO 04-1 was:
The closing of a real estate transaction constitutes the practice of law. If an attorney supervises the closing
conducted by the non-lawyer entity, then the attorney is a fiduciary with respect to the closing proceeds and closing
proceeds must be handled in accordance with Rule 1.15 (II). If the attorney does not supervise the closings, then,
under the facts set forth above, the lawyer is assisting a non-lawyer in the unauthorized practice of law.
The Question Presented in FAO 04-1 does not reflect the typical situation in a witness-only closing. In the situation
addressed in FAO 04-1 the attorney has actually created the “non-lawyer entity” (presumably a Title Company) which
conducted the closing, received funds from the lender, deposited those funds in a non IOLTA account and disbursed
the proceeds from that non IOLTA account and the attorney presumably benefited from the use of a non IOLTA
account either by receiving interest from the Title Company on the closing proceeds or by receiving favorable
treatment from the bank where the non IOLTA account was created. In a typical witness-only closing the attorney is
retained by a title company or bank whose only relationship to that attorney is an independent contractor relationship
and the attorney has no ownership interest in the title company and receives no benefits whatsoever from the
handling of the closing funds.
Specifically, Footnote 3 in S05U1720 specifically states that:
“3. The sole issue addressed in the proposed opinion is whether an attorney may participate in a non-lawyer entity
which the attorney created for the purpose of conducting residential real estate closings without depositing the
closing proceeds in an IOLTA account.” (Emphasis added)
Thus, neither FAO 04-1 nor the Supreme Court Advisory Opinion affirming FAO 04-1 addresses the typical witness-
only closing scenario because the Title Company (non-lawyer entity) in a typical witness-only closing was not created
by the attorney. Additionally, both FAO 04-1 and S05U1720 assume that the closing proceeds are to be received and
disbursed by the attorney or a Title Company, or other entity, created by the attorney whereas, in a typical witness-
only closing, the closing funds are never under the control of the attorney or an entity created by the attorney.
Presumably, the underlying rationale for both the FAO and the Court‟s opinion is to prevent an attorney from
avoiding the requirements of the IOLTA rules by creating a Title Company not bound by the IOLTA rules and
depositing loan proceeds into and disbursing payments from that Title Company‟s non IOLTA account. The IOLTA
rules were established as a method of raising money for charitable purposes, primarily the provision of civil legal
services to indigent persons. (Click here for more information on IOLTA accounts) In an IOLTA account all interest on
the funds deposited in that account are sent monthly, by the bank, to the Georgia Bar Foundation to be used to
provide legal services to the indigent. If a lawyer were allowed to establish an entity which received and disbursed
loan proceeds from a non IOLTA account then the entity (Title Company) would presumably earn interest on those
proceeds which interest would be paid to the owner of the Title Company; in this case, the attorney who established
the Title Company instead of being used for the purposes contemplated by the IOLTA rules. Both the FAO and the
Supreme Court Opinion clearly state that a Georgia Attorney may not conduct closings in that fashion.
FAO04-1 also states that “…to the extent that a non-lawyer entity is conducting residential real estate
closings not under the supervision of a lawyer, the non-lawyer entity is engaged in the practice of law.” In
the typical witness-only closing, the attorney, not the “non-lawyer entity”, is conducting the closing. The
closing funds are disbursed by either the Title Company or the Lender however and are never under the
control of the closing attorney. FAO04-1 further states that “If an attorney supervises the residential
closing[1], then that attorney is a fiduciary with respects (sic) to the closing proceeds.”, and also states
“The lawyer's responsibility with regard to such funds is addressed by Rule 1.15 (II) of the Georgia Rules
of Professional Conduct ….” Rule 1.15 (II) of the Georgia Rules of Professional Conduct provides, in
part:
“SAFEKEEPING PROPERTY - GENERAL
(a) Every lawyer who practices law in Georgia, whether said lawyer practices as a sole
practitioner, or as a member of a firm, association, or professional corporation, and who
receives money or property on behalf of a client or in any other fiduciary capacity, shall
maintain or have available a trust account as required by these Rules. All funds held by a
lawyer for a client and all funds held by a lawyer in any other fiduciary capacity shall be
deposited in and administered from such account.” (Emphasis added)
Thus, Rule 1.15 (II), FAO 04-1 and S05U1720 all assume that the closing attorney or an entity created by
that attorney is going to receive and disburse the closing proceeds and is therefore required to deposit
into and disburse such funds from an IOLTA account. In the Question Presented by FAO 04-1 the closing
attorney is attempting to circumvent the provisions of Rule 1.15 (II) by establishing an entity not bound by
those rules and then using that entity to earn interest on the closing funds (or receive some other benefit),
which he would not be able to do if he received the closing funds directly. In the typical witness-only
closing the closing attorney is not attempting to earn money on the account in which the closing funds are
deposited nor is he contriving to avoid the IOLTA requirements by using an entity he has created. The
public purposes of the IOLTA regulations are not undermined by the attorney in a witness-only closing (as
they are in the Question Presented in S05U1720) because neither the attorney nor an entity created by
him and under has control ever has possession of the closing proceeds and so the attorney does not
benefit in any way from the handling of those proceeds.
Assuming, arguendo, that The Supreme Court Opinion referenced above could be read to require that
every closing attorney has a fiduciary duty as to all closing funds and must require the lender or title
company to furnish all of the closing funds to the attorney for deposit to and disbursal from an IOLTA
account then I contend that such a reading would constitute Obiter Dicta under Georgia Law and, as
such, would not be binding precedent because that issue was not the issue presented to the Court for
determination.
However, I do not believe that the Supreme Court intended to rule that all closing proceeds must always be delivered
to the closing attorney to be deposited in and disbursed from an IOLTA account with the closing attorney acting as a
fiduciary as to all such funds. Such a ruling would cause much mischief to the current state of real estate closing
practice, whether “full service” or “limited service” (witness only) closings. For example, in a refinance where the
lender for the refinance loan and the lender being paid off by the refinance loan are the same entity it is a common
practice to “net fund” the closing; that is, the bank sends the closing attorney the loan proceeds less the amount of
the loan being paid off, with the transfer of the loan payoff funds being handled as an internal transfer within the
lending institution. A broad reading of the requirement that all closing proceeds flow through the closing attorney‟s
IOLTA account would prohibit the current “net funding” of refinances at the same bank.
Additionally, the fiduciary duty that every lawyer has when handling clients‟ funds is intended to protect the parties
involved in the transaction from misuse of those funds by the attorney. Suppose a national lending institution were to
decide that it no longer wished to risk defalcation by attorneys or title companies and would henceforth prepare all
checks involved in its loan closings internally and send them to the closing attorney. Those funds would never be
deposited in an IOLTA account. Would the State Bar or the Supreme Court say that the bank could not legally issue
those checks without being engaged in the practice of law or that a closing attorney using those checks was in
violation of either his fiduciary duties or the provisions of Rule 1.15 (II) or that the attorney, by using the bank‟s
checks, was assisting in the unauthorized practice of law? I doubt it. A Title Company, acting at the direction of the
lending institution is, in my opinion, likewise not involved in the practice of law simply because it issues checks in a
loan transaction. I simply don‟t believe that the mere issuing of checks constitutes the practice of law.
In conclusion, my opinion is that FAO 04-1 and S05U1720 are limited to the situation where an attorney has created a
non-lawyer entity to conduct loan closings (and thus is attempting to circumvent the IOLTA regulations for his own
benefit) and that neither FAO 04-1 nor S05U1720 apply directly, nor by any reasonable inference, indirectly to
closing proceeds handled by a bank or title company in a witness-only closing when the closing attorney‟s
relationship to that bank or title company is that of an independent contractor and where the closing proceeds are
never delivered to or under the control of the closing attorney.
borrowers are located in Georgia but the property is in another State. Questions also arise regarding (3) whether a
lawyer must conduct the closing in a situation where Georgia real estate is given as security when a loan is closed
outside the State and (4) Is a lawyer required to disburse funds for a „witness-only‟ or „limited service‟ closing
conducted in Georgia?
Most people in the loan industry use the term "Lawyer Only State" to refer to those states which require that a lawyer
(as opposed to a Notary or other "Loan Signing Agent") conduct all loan closings in which real property is given as
security for the loan, even if the lawyer's role involves only explaining the documents and witnessing the signing of
those documents but does not require the lawyer to perform a title search or other activities normally associated with
closing a real estate loan. The question arises most often in the context of a Refinancing of an existing loan ("REFI")
or the granting of a Home Equity Line of Credit ("HELOC") where the lender has prepared its own loan documents
and has obtained a title search from a non-lawyer or from a lawyer other than the person conducting the closing.
Question (1), "Is Georgia a Lawyer Only State?" was answered definitively by the Georgia Supreme Court in
November 10, 2003 when it issued a ruling in the case designated: IN RE UPL ADVISORY OPINION 2003-2 (277 Ga.
472). That case held that a so called "Witness-Only" closing may be conducted only by a lawyer in Georgia. The
Supreme Court Opinion, with slight formatting changes to increase readability for the lay person, and the UPL
(Unauthorized Practice of Law) Opinion from the State Bar on which the Supreme Court Opinion is based, may be
read HERE.
Questions (2) and (3) have not been addressed by the Georgia Courts, to the best of my knowledge, and
my opinion, expressed below, does not constitute legal advice and should not be relied upon by anyone
in making a decision regarding the issues discussed. You should consult your own attorney concerning
the state of the law applicable to your particular situation.
Question (2), "Is a lawyer required for a closing when the borrowers are located in Georgia but the real property
given as security for the loan is located in a state other than Georgia? It appears that the Supreme Court decision
referenced above, although not specifically addressing the question presented, did not limit its Opinion to real
property located in Georgia and would clearly require that a lawyer conduct the closing in this situation. The practice
of law, as it relates to conveyancing, is an activity unrelated to the location of the property involved. As the Georgia
Supreme Court has ruled that the actions of overseeing the closing, reviewing and explaining documents and
obtaining signatures constitutes the practice of law in Georgia, the location of the real property is immaterial. It is the
actions, in the State of Georgia, of the individual conducting the closing which are subject to Georgia Law, not the
property itself. If those actions are conducted in Georgia then it is highly likely that the Court's Opinion applies and a
lawyer is required. My only caveat to this position would be a loan closing conducted in Georgia but involving real
property located in those states which use Mortgages (or other instruments which merely create a lien against
property) as opposed to Security Deeds or Deeds to Secure Debt. Security Deeds and Deeds to Secure Debt, as
used in Georgia, actually convey legal title to the property used as security for the loan to the Grantee, the lender,
while leaving the Grantor, the borrower, with equitable title. Mortgages, on the other hand create a lien against
property used as security for the loan but leave legal title in the landowner, the borrower. Since the rationale of the
Supreme Court opinion rests, at least in part, on the fact that only lawyers may prepare and supervise the creation
and execution of a "deed of conveyance", the Court might hold that a closing conducted in Georgia but involving a
loan secured by a mortgage on real property in another state does not constitute "conveyancing", because of the
lack of a "Deed of Conveyance", and thus conducting such a closing might not constitute the practice of law.
However, even in this situation, it is more likely that the Court would hold that a mortgage conveys a lien from
Mortgagor to Mortgagee and is thus a conveyancing transaction, regardless of the absence of a "Deed of
Conveyance".
Question (3), "Is a lawyer required for a loan closing conducted in a state other than Georgia but in which Georgia
real property is given as security?" In my opinion, the answer is No. Under our legal system, a State Court's
jurisdiction, in most cases, is limited to acts occurring within its geographic boundaries. The Georgia Supreme Court
has jurisdiction to define what actions constitute the practice of law in Georgia but that jurisdiction does not extend to
acts carried out in other states. Each individual state has the right to define the "Practice of Law" within its boundaries
and those states, such as California, which allow notaries to conduct "Witness Only" closings within their boundaries
are not bound by the Georgia Supreme Court's Opinion as to what constitutes the practice of law. It is the location of
the closing rather than the location of the property which governs whether the closing must be conducted by an
attorney.
Again, I stress that my answers to questions (2) and (3) are only my opinion! You should consult your own
attorney concerning the legal status of your actions in those situations.
Question (4), "Is a lawyer required to disburse funds for a „witness-only‟ or „limited service‟ closing conducted in
Georgia?”
Again, in my opinion, the answer is no. There is considerable difference of opinion within the State Bar on this issue.
Most lawyers who take the position that a “closing attorney”, including an attorney acting as closing agent on a
witness-only closing, is required to issue the checks for that closing rely on Formal Advisory Opinion 04-1 (hereafter
FAO 04-1) of the State Bar and on the Supreme Court of Georgia opinion “S05U1720. Formal Advisory Opinion 04-1”
(hereafter S05U1720), decided February 13, 2006, which affirmed FAO 04-1.
In FAO 04-1 the Question Presented was:
May a lawyer participate in a non-lawyer entity created by the lawyer for the purpose of conducting residential real
estate closings where the closing proceeds received by the entity are deposited in a non IOLTA interest bearing bank
trust account rather than an IOLTA account? (Emphasis added)
The Summary Answer to the Question Presented in FAO 04-1 was:
The closing of a real estate transaction constitutes the practice of law. If an attorney supervises the closing
conducted by the non-lawyer entity, then the attorney is a fiduciary with respect to the closing proceeds and closing
proceeds must be handled in accordance with Rule 1.15 (II). If the attorney does not supervise the closings, then,
under the facts set forth above, the lawyer is assisting a non-lawyer in the unauthorized practice of law.
The Question Presented in FAO 04-1 does not reflect the typical situation in a witness-only closing. In the situation
addressed in FAO 04-1 the attorney has actually created the “non-lawyer entity” (presumably a Title Company) which
conducted the closing, received funds from the lender, deposited those funds in a non IOLTA account and disbursed
the proceeds from that non IOLTA account and the attorney presumably benefited from the use of a non IOLTA
account either by receiving interest from the Title Company on the closing proceeds or by receiving favorable
treatment from the bank where the non IOLTA account was created. In a typical witness-only closing the attorney is
retained by a title company or bank whose only relationship to that attorney is an independent contractor relationship
and the attorney has no ownership interest in the title company and receives no benefits whatsoever from the
handling of the closing funds.
Specifically, Footnote 3 in S05U1720 specifically states that:
“3. The sole issue addressed in the proposed opinion is whether an attorney may participate in a non-lawyer entity
which the attorney created for the purpose of conducting residential real estate closings without depositing the
closing proceeds in an IOLTA account.” (Emphasis added)
Thus, neither FAO 04-1 nor the Supreme Court Advisory Opinion affirming FAO 04-1 addresses the typical witness-
only closing scenario because the Title Company (non-lawyer entity) in a typical witness-only closing was not created
by the attorney. Additionally, both FAO 04-1 and S05U1720 assume that the closing proceeds are to be received and
disbursed by the attorney or a Title Company, or other entity, created by the attorney whereas, in a typical witness-
only closing, the closing funds are never under the control of the attorney or an entity created by the attorney.
Presumably, the underlying rationale for both the FAO and the Court‟s opinion is to prevent an attorney from
avoiding the requirements of the IOLTA rules by creating a Title Company not bound by the IOLTA rules and
depositing loan proceeds into and disbursing payments from that Title Company‟s non IOLTA account. The IOLTA
rules were established as a method of raising money for charitable purposes, primarily the provision of civil legal
services to indigent persons. (Click here for more information on IOLTA accounts) In an IOLTA account all interest on
the funds deposited in that account are sent monthly, by the bank, to the Georgia Bar Foundation to be used to
provide legal services to the indigent. If a lawyer were allowed to establish an entity which received and disbursed
loan proceeds from a non IOLTA account then the entity (Title Company) would presumably earn interest on those
proceeds which interest would be paid to the owner of the Title Company; in this case, the attorney who established
the Title Company instead of being used for the purposes contemplated by the IOLTA rules. Both the FAO and the
Supreme Court Opinion clearly state that a Georgia Attorney may not conduct closings in that fashion.
FAO04-1 also states that “…to the extent that a non-lawyer entity is conducting residential real estate
closings not under the supervision of a lawyer, the non-lawyer entity is engaged in the practice of law.” In
the typical witness-only closing, the attorney, not the “non-lawyer entity”, is conducting the closing. The
closing funds are disbursed by either the Title Company or the Lender however and are never under the
control of the closing attorney. FAO04-1 further states that “If an attorney supervises the residential
closing[1], then that attorney is a fiduciary with respects (sic) to the closing proceeds.”, and also states
“The lawyer's responsibility with regard to such funds is addressed by Rule 1.15 (II) of the Georgia Rules
of Professional Conduct ….” Rule 1.15 (II) of the Georgia Rules of Professional Conduct provides, in
part:
“SAFEKEEPING PROPERTY - GENERAL
(a) Every lawyer who practices law in Georgia, whether said lawyer practices as a sole
practitioner, or as a member of a firm, association, or professional corporation, and who
receives money or property on behalf of a client or in any other fiduciary capacity, shall
maintain or have available a trust account as required by these Rules. All funds held by a
lawyer for a client and all funds held by a lawyer in any other fiduciary capacity shall be
deposited in and administered from such account.” (Emphasis added)
Thus, Rule 1.15 (II), FAO 04-1 and S05U1720 all assume that the closing attorney or an entity created by
that attorney is going to receive and disburse the closing proceeds and is therefore required to deposit
into and disburse such funds from an IOLTA account. In the Question Presented by FAO 04-1 the closing
attorney is attempting to circumvent the provisions of Rule 1.15 (II) by establishing an entity not bound by
those rules and then using that entity to earn interest on the closing funds (or receive some other benefit),
which he would not be able to do if he received the closing funds directly. In the typical witness-only
closing the closing attorney is not attempting to earn money on the account in which the closing funds are
deposited nor is he contriving to avoid the IOLTA requirements by using an entity he has created. The
public purposes of the IOLTA regulations are not undermined by the attorney in a witness-only closing (as
they are in the Question Presented in S05U1720) because neither the attorney nor an entity created by
him and under has control ever has possession of the closing proceeds and so the attorney does not
benefit in any way from the handling of those proceeds.
Assuming, arguendo, that The Supreme Court Opinion referenced above could be read to require that
every closing attorney has a fiduciary duty as to all closing funds and must require the lender or title
company to furnish all of the closing funds to the attorney for deposit to and disbursal from an IOLTA
account then I contend that such a reading would constitute Obiter Dicta under Georgia Law and, as
such, would not be binding precedent because that issue was not the issue presented to the Court for
determination.
However, I do not believe that the Supreme Court intended to rule that all closing proceeds must always be delivered
to the closing attorney to be deposited in and disbursed from an IOLTA account with the closing attorney acting as a
fiduciary as to all such funds. Such a ruling would cause much mischief to the current state of real estate closing
practice, whether “full service” or “limited service” (witness only) closings. For example, in a refinance where the
lender for the refinance loan and the lender being paid off by the refinance loan are the same entity it is a common
practice to “net fund” the closing; that is, the bank sends the closing attorney the loan proceeds less the amount of
the loan being paid off, with the transfer of the loan payoff funds being handled as an internal transfer within the
lending institution. A broad reading of the requirement that all closing proceeds flow through the closing attorney‟s
IOLTA account would prohibit the current “net funding” of refinances at the same bank.
Additionally, the fiduciary duty that every lawyer has when handling clients‟ funds is intended to protect the parties
involved in the transaction from misuse of those funds by the attorney. Suppose a national lending institution were to
decide that it no longer wished to risk defalcation by attorneys or title companies and would henceforth prepare all
checks involved in its loan closings internally and send them to the closing attorney. Those funds would never be
deposited in an IOLTA account. Would the State Bar or the Supreme Court say that the bank could not legally issue
those checks without being engaged in the practice of law or that a closing attorney using those checks was in
violation of either his fiduciary duties or the provisions of Rule 1.15 (II) or that the attorney, by using the bank‟s
checks, was assisting in the unauthorized practice of law? I doubt it. A Title Company, acting at the direction of the
lending institution is, in my opinion, likewise not involved in the practice of law simply because it issues checks in a
loan transaction. I simply don‟t believe that the mere issuing of checks constitutes the practice of law.
In conclusion, my opinion is that FAO 04-1 and S05U1720 are limited to the situation where an attorney has created a
non-lawyer entity to conduct loan closings (and thus is attempting to circumvent the IOLTA regulations for his own
benefit) and that neither FAO 04-1 nor S05U1720 apply directly, nor by any reasonable inference, indirectly to
closing proceeds handled by a bank or title company in a witness-only closing when the closing attorney‟s
relationship to that bank or title company is that of an independent contractor and where the closing proceeds are
never delivered to or under the control of the closing attorney.
Is Georgia a Lawyer Only State ?