Using an attorney to perform real estate closings is the norm in Connecticut, and many people assume that this is the case everywhere in the United States. However, in about half of the states, an attorney is not typically used by local custom, and the use of an attorney is required by law in only a handful of states. Unfortunately, we have seen that closing practices common in other states have become accepted in Connecticut, and increasingly closings were no longer being handled by Connecticut real estate attorneys, thereby increasing fraud claims and flooding the land records with unreleased liens. (GPS Blog: Notary Closings, A Bad Concept!). This is especially true in certain types of closings, such as the sale of bank-owned foreclosure properties, or residential refinance closings, when often the closing would be handled by an out of state entity and no Connecticut attorney was involved.    The prevalence of on-line lenders has also influenced this trend, since the out of state lenders are typically more familiar with using a title or abstract company and not an attorney to perform the loan closing. This new legislation was motivated by the fact that while Connecticut was considered by tradition an attorney state for real estate closings, there was no actual legal requirement to that effect. Attorney Louis Crisci of our firm brought this issue to the attention of state Senator Leonard Fasano, who introduced a bill to make it the law in Connecticut that a real estate closing requires the use of a Connecticut licensed real estate attorney.

The Connecticut General Assembly has considered and now passed Senator Fasano’s proposal, Senate Bill 320, which will be effective October 1, 2019 (assuming it is signed into law by Governor Lamont). The bill states that “no person shall conduct a real estate closing unless such person has been admitted as an attorney in this state . . .” A real estate closing is defined to include (1) all mortgage loan transactions except for home equity lines of credit, or other loans in which no title insurance policy is issued and (2) any transaction in which consideration is paid to change the ownership of real property in Connecticut. The legislation for all intents and purposes covers all real estate transactions for the financing, purchase or sale of real property.

Hopefully this law will help protect consumers from unknowingly trusting their important legal affairs and their largest asset purchases to individuals who may well be unqualified and untrained in Connecticut law.

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