I am asked, often, (1) Whether Georgia is a "Lawyer Only" State and, if so, (2) whether a lawyer is needed when the
borrowers are located in Georgia but the property is in another State. Questions also arise regarding (3) whether a
lawyer must conduct the closing in a situation where Georgia real estate is given as security when a loan is closed
outside the State and (4) Is a lawyer required to disburse funds for a loan closing conducted in Georgia?
Most people in the loan industry use the term "Lawyer Only State" to refer to those states which require that a lawyer
(as opposed to a Notary or other "Loan Signing Agent") conduct all loan closings in which real property is given as
security for the loan, even if the lawyer's role involves only explaining the documents and witnessing the signing of
those documents but does not require the lawyer to perform a title search or other activities normally associated with
closing a real estate loan. The question arises most often in the context of a Refinancing of an existing loan ("REFI")
or the granting of a Home Equity Line of Credit ("HELOC") where the lender has prepared its own loan documents
and has obtained a title search from a non-lawyer or from a lawyer other than the person conducting the closing.
Question (1), "Is Georgia a Lawyer Only State?" was answered definitively by the Georgia Supreme Court in
November 10, 2003 when it issued a ruling in the case designated: IN RE UPL ADVISORY OPINION 2003-2 (277 Ga.
472). That case held that a so called "Witness-Only" closing may be conducted only by a lawyer in Georgia. The
Supreme Court Opinion, with slight formatting changes to increase readability for the lay person, and the UPL
(Unauthorized Practice of Law) Opinion from the State Bar on which the Supreme Court Opinion is based, may be
Questions (2) and (3) have not been addressed by the Georgia Courts, to the best of my knowledge, and
my opinion, expressed below, does not constitute legal advice and should not be relied upon by anyone
in making a decision regarding the issues discussed. You should consult your own attorney concerning
the state of the law applicable to your particular situation.
Question (2), "Is a lawyer required for a closing when the borrowers are located in Georgia but the real property
given as security for the loan is located in a state other than Georgia? It appears that the Supreme Court decision
referenced above, although not specifically addressing the question presented, did not limit its Opinion to real
property located in Georgia and would clearly require that a lawyer conduct the closing in this situation. The practice
of law, as it relates to conveyancing, is an activity unrelated to the location of the property involved. As the Georgia
Supreme Court has ruled that the actions of overseeing the closing, reviewing and explaining documents and
obtaining signatures constitutes the practice of law in Georgia, the location of the real property is immaterial. It is the
actions, in the State of Georgia, of the individual conducting the closing which are subject to Georgia Law, not the
property itself. If those actions are conducted in Georgia then it is highly likely that the Court's Opinion applies and a
lawyer is required. My only caveat to this position would be a loan closing conducted in Georgia but involving real
property located in those states which use Mortgages (or other instruments which merely create a lien against
property) as opposed to Security Deeds or Deeds to Secure Debt. Security Deeds and Deeds to Secure Debt, as
used in Georgia, actually convey legal title to the property used as security for the loan to the Grantee, the lender,
while leaving the Grantor, the borrower, with equitable title. Mortgages, on the other hand create a lien against
property used as security for the loan but leave legal title in the landowner, the borrower. Since the rationale of the
Supreme Court opinion rests, at least in part, on the fact that only lawyers may prepare and supervise the creation
and execution of a "deed of conveyance", the Court might hold that a closing conducted in Georgia but involving a
loan secured by a mortgage on real property in another state does not constitute "conveyancing", because of the
lack of a "Deed of Conveyance", and thus conducting such a closing might not constitute the practice of law.
However, even in this situation, it is more likely that the Court would hold that a mortgage conveys a lien from
Mortgagor to Mortgagee and is thus a conveyancing transaction, regardless of the absence of a "Deed of
Question (3), "Is a lawyer required for a loan closing conducted in a state other than Georgia but in which Georgia
real property is given as security?" In my opinion, the answer is No. Under our legal system, a State Court's
jurisdiction, in most cases, is limited to acts occurring within its geographic boundaries. The Georgia Supreme Court
has jurisdiction to define what actions constitute the practice of law in Georgia but that jurisdiction does not extend to
acts carried out in other states. Each individual state has the right to define the "Practice of Law" within its boundaries
and those states, such as California, which allow notaries to conduct "Witness Only" closings within their boundaries
are not bound by the Georgia Supreme Court's Opinion as to what constitutes the practice of law. It is the location of
the closing rather than the location of the property which governs whether the closing must be conducted by an
Again, I stress that my answers to questions (2) and (3) are only my opinion! You should consult your own
attorney concerning the legal status of your actions in those situations.
Question (4), "Is a lawyer required to disburse funds for loan closings conducted in Georgia?”
Code Section 44-14-13 of the Official Code of Georgia Annotated provides that only a Settlement Agent who is a
Lender or an active member of The State Bar of Georgia may disburse funds for loans which will be secured by
deeds to secure debt or mortgages on real estate within the State of Georgia. So, except for proceeds disbursed by
the lender itself, all loan proceeds must be disbursed by a Georgia Attorney if the loan will be secured by deeds to
secure debt or mortgages on real estate within the State of Georgia. My reading of the statute is that loan closings
conducted in Georgia for loans secured by real estate located outside the State of Georgia would not be subject to
the limitations on disbursements set out in 44-14-13 but would still be subject to the requirement that a lawyer
conduct the closing for the reasons set out in my answer to Question (2) above.
Is Georgia a Lawyer Only State ?