ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, September 21, 1996 TAG: 9609230035
SECTION: BUSINESS PAGE: A4 EDITION: METRO
DATELINE: RICHMOND
SOURCE: DAVID M. POOLE STAFF WRITER
The Justice Department and Federal Trade Commission staff said Friday that a proposed Virginia State Bar rule preventing anyone except lawyers from closing real estate deals would be anti-competitive and hurt consumers.
"Without competition for these services, Virginians are likely to see their real estate closing costs go up," said Anne K. Bingaman, assistant attorney general in the federal Antitrust Division.
The Justice Department and FTC letter comes a month before a State Bar Council vote on the proposed rule.
At stake is a turf battle between lawyers and new competitors - such as title companies and banks - over business that typically generates settlement fees of $350 to $600 per transaction.
Attorneys argue that home buyers put themselves at risk when buying property without legal representation. Settlement agents outside the law profession contend consumers making routine purchases should not have to hire an attorney.
Most real estate closings in Northern Virginia are handled by lay firms, and the practice is growing more common in Hampton Roads. In the Roanoke region, lawyers still handle most closings.
In their letter, Justice and the FTC concede that consumers who hire attorneys "may get better service and representation" at closing.
But, the letter continued, "this is not a reason to eliminate lay closing services as an alternative to consumers who wish to utilize them."
Instead of banning lay settlement companies, the federal agencies recommended buyers who forgo lawyers be given written notice of the risk involved.
Charles Lollar, a Norfolk lawyer who heads the Virginia Real Estate Attorney League, replied that a written notice would be no more effective than warning labels on cigarette packs.
"Half measures are not sufficient, and only an attorney retained by the party can exercise the independent judgment necessary to protect the consumer," Lollar said.
The decisive State Bar Council vote will take place at a regular meeting Oct. 17-18 in Roanoke.
"We've had more comment on this than on anything the Bar has ever done," said James McCauley, the organization's ethics counsel.
If the Bar Council approves the rule, the Virginia Supreme Court would have to affirm the matter before it carried the weight of law.
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