One major concern for multi-state mortgage lenders is the diversity of real estate law throughout the country. This includes the question of whether preparation of documents affecting title to real property, such as the security instrument securing the loan, is considered the practice of law. In general, each state falls into one of three categories.2 The first category consists of states in which preparation of documents affecting title to real property is not considered the practice of law. In these states, any person may prepare these documents. In the second category, preparation of documents affecting title to real property is considered the practice of law, but there is an exception permitting a “party to the transaction” (that is, the lender or the borrower) to prepare the documents. In these second-category states, the documents may be prepared by the lender, the borrower, or an outside attorney. The last category consists of states in which preparation of documents affecting title to real property is considered the practice of law and there is not a “party to the transaction” exception. Texas falls within this category.
Full Memorandum
