September CBA Report

By Aryeh Younger T he purpose of this article is to explore one possible problem relating to instances in which real estate brokers advise their clients against purchasing an owner’s policy of title insurance. A survey of Ohio law strongly suggests that real estate brokers who tell their clients not to purchase an owner’s policy of title insurance are engaged in the unauthorized practice of law. The unauthorized practice of law is a serious offense in Ohio and can expose a violator to both criminal and civil penalties. Real estate brokers, who serve an integral function as experts in the real estate market, should be aware of the potential consequences of providing advice on matters outside their area of expertise. The risks associated with failing to purchase an owner’s policy of title insurance are well documented. Real estate brokers and their salespersons who dissuade clients from purchasing title insurance run the risk that their clients may suffer severe repercussions due to hidden title defects. The Constitution of the State of Ohio states that the Ohio Supreme Court is tasked with regulating admission to the prac- tice of law and with “all other matters relating to the practice of law” in the state. 1 To this effect, the Ohio Supreme Court Rules for the Government of the Bar of Ohio empowers a board on the unauthorized practice of law to make recommendations regarding possible violators engaged in the unauthorized practice of law, which is defined as the “rendering of legal services for another by any person not admitted to practice [law] in Ohio under Rule 1 and not granted active statute under Rule II or Rule IX of the Supreme Court Rules for the Government of the Bar of Ohio.” 2 The prohibition against the unauthorized practice of law is further reinforced throughout the Ohio Revised Code, as cited in §4705.07, which states that “[n]o person who is not licensed to practice law in this state shall…[c]ommit any act that is prohibited by the supreme court as being the unauthorized practice of law.” 3 Quite notably, it has been documented that real estate profes- sionals around the country are particularly at risk for engaging in the unauthorized practice of law. 4 Real estate transactions often involve laypersons with little or no experience in real estate, which makes them especially dependent on the guidance of trained professionals, including real estate brokers, loan officers, and attorneys. Non-attorney professionals may frequently be inclined to offer advice on legal topics related to a transaction, including matters related to purchasing title insurance. However, a survey of Ohio case-law strongly suggests that the Ohio Supreme Court would consider certain advice relating to purchasing title insur- ance to constitute the unauthorized practice of law. The Danger Posed to Real Estate Professionals Who Advise Their Clients Not to Purchase Title Insurance A WORD OF CAUTION: www.CincyBar.org September 2018 CBA REPORT l 5 Cover Article