R.I. Bar Association seeks to require lawyers be present for all real-estate closings

PROVIDENCE — Purchasing a home is one of the most significant transactions in many people’s lives.

How buyers secure that home and who is best to be at their side as they close the deal played out Thursday in arguments before the state Supreme Court.

Four justices of the high court waded into the murky territory of what represents the practice of law in Rhode Island and whether a lawyer must be at a buyer’s side as he or she closes on a home. (Justice Maureen McKenna Goldberg recused herself.)

The Rhode Island Bar Association argued that lawyers are best equipped to ferret out potential pitfalls involving taxation, easements, probate law and the environment.

Purchasing a property entails the “transfer of important legal rights. There should be a lawyer there,” J. Richard Ratcliffe said.

A group of 32 lawyers and law firms agreed, saying legal expertise was necessary for the public’s protection.

“The answer is you need the lawyer there at every closing,” Thomas More Dickinson argued on their behalf.

But other interests pushed back. Requiring a lawyer could add thousands of dollars to a sale, and many tasks are administrative and could be accomplished by a notary public or title insurer.

The U.S. Department of Justice and the Federal Trade Commission asserted that banning non-lawyers from conducting real-estate transactions would harm customers.

“Competition generally protects consumers, and overbroad interpretations of 'the practice of law’ should not be used to confer a monopoly on attorneys unless restrictions on competition are justified by a proven need and are narrowly drawn to minimize their anticompetitive impact,” the federal agencies wrote in a brief backing non-lawyer interests.

The controversy, which drew a packed audience to the seventh-floor courtroom, arose from complaints fielded by the state Supreme Court Unauthorized Practice of Law Committee. In each, the committee determined that the parties had engaged in the unauthorized practice of law and recommended the high court find that conducting a real-estate transaction represents the practice of law.

One complaint targeted Daniel S. Balkun, owner of Balkun Title & Closing, a Warwick company founded in 2016. According to the committee, Balkun’s deposits in the first half of 2018 averaged $10.4 million a month.

Balkun, a former correctional officer at the state Department of Corrections, was indicted in 1997 and later pleaded guilty to money laundering, aiding and abetting, in a sports gambling scheme in Las Vegas. He was sentenced to serve 46 months.

In 2016, he applied for a title insurance agent’s license with the Rhode Island Department of Business Regulation. He responded yes when asked if he had ever been convicted of a felony, but the department never followed up and granted the license Feb. 25, 2016, the committee wrote in its report.

The department renewed the license in September 2017, but initiated a process to evaluate his felony conviction. It has since imposed conditions on Balkun’s license, including that he hire certified public accountants to review his company’s financial records on a quarterly basis for two years and bi-annually for two more years.

The committee determined that Balkun Title had engaged in the unauthorized practice of law by preparing deeds, residency affidavits and powers of attorney for a sellers. The committee found, too, that Balkun Title held itself out as an entity qualified to practice law in Facebook and social media posts.

Balkun’s lawyer, Robert A. D’Amico Jr., told the court that most closings were routine, with no questions raised. While complications could arise, “there’s no evidence of these hypotheticals happening.”

“There’s no evidence that any member of the public had been harmed,” D’Amico said. He urged the court to further study the issue before “upending a billion-dollar industry.”

“I think the public is adequately protected. The title industry is very diligent. They’ve been doing work in this state for decades and now it’s an issue,” D’Amico said.

The committee also found that SouthCoast Title and Escrow Inc, a Cranston title insurer owned by lawyer Anthony Senerchia and his wife, Karen, and Raymond Morris, also engaged in the unauthorized practice of law by providing certain real-estate services in Rhode Island and holding itself out as an entity qualified to practice law.

Though Senerchia conducts title examinations and closings as a lawyer, SouthCoast is a title insurance company, not a law firm, the committee said. It noted that the company had changed its social media presence to address concerns.

Lauren E. Jones, a lawyer representing Anthony Senerchia and SouthCoast, told the court that he believed the company was protected by the Rhode Island Title Insurers Act, , a state law enacted in 2010. The company, however, had adjusted its practice so Senerchia’s law firm, Senerchia & Sheehan, would undertake particular duties.

“I think there are circumstances in which a closing doesn’t require an attorney, although it would be better practice,” Jones said.

“I think we can safely say it’s always better to have an attorney … the question is the cost,” Chief Justice Paul A. Suttell said.

kmulvane@providencejournal.com

@kmulvane

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