FTC Staff and Justice Department Urge Massachusetts Legislature to Allow Nonlawyers to Compete with Lawyers For Real Estate Closing Services

October 12, 2004

Federal Trade Commission staff and the Justice Department today announced a letter urging the Massachusetts House of Representatives to adopt a bill that would enable nonlawyers to compete with lawyers to perform certain real estate closing services. According to the agencies, competition is likely to lower prices and enable consumers to receive better services.

The bill, HB 180, would amend the General Laws of Massachusetts to authorize nonlawyers to perform real estate closing services, such as drafting deeds, mortgages, leases and agreements; examining titles; issuing title certification or policies of title insurance; and representing lenders as their closing agents.

“As the staff analysis shows, HB 180 is likely to benefit consumers in Massachusetts by encouraging competition that leads to lower prices, more convenient services, and the option to use Internet-based loan services,” noted FTC Chairman Deborah Platt Majoras.

“The bill likely will lower prices for real estate closings for Massachusetts consumers in two ways,” said R. Hewitt Pate, Assistant Attorney General in charge of the Justice Department's Antitrust Division. “First, consumers will be able to choose to use a nonlawyer instead of an attorney for their closings. Historically, lawyers charge more than lay providers. Second, with competition from nonlawyers, lawyers’ fees are likely to decrease.”

The letter also pointed to state supreme court decisions and scholarly studies indicating that consumers are not likely to face additional risk of harm from nonlawyer closings.

The Commission vote authorizing staff to file the comments was 5-0.

Source: FTC