May an out-of-state lawyer file a deed in South Carolina?
Answer: Preparation and filing of deeds is the practice of law in South Carolina and therefore may only be done under the supervision of a lawyer licensed to practice in South Carolina, unless one of the exceptions of Rule 5.5(c), South Carolina Rules of Professional Conduct, applies.
In Doe v. McMaster, 355 S.C. 306, 585 S.E.2d 773 (2003), the Court refined the definition of the unauthorized practice of law in the context of residential real estate closings first set forth in State v. Buyers Serv. Co., Inc., 292 S.C. 426, 357 S.E.2d 15 (1987). In McMaster and Buyers Service, the Court identified the following four steps in a residential real estate closing that involve the practice of law:
1) The title search, preparation of title documents for the lender, and subsequent preparation of related documents is the practice of law, which must be performed or supervised by a lawyer.
2) A lender may prepare legal documents for use in financing or refinancing a real property loan so long as an independent lawyer reviews them and makes any corrections necessary "to ensure their compliance with law."
3) Real estate closings and mortgage loan closings should be conducted only under a lawyer's supervision. The supervising lawyer may represent both the lender and the borrower after full disclosure and with each party's consent.
4) The recording of documents is the "final phase" of the real estate loan process and must be done under the supervision of a lawyer.
Also, in Buyers Service the Court held that delivering documents to the courthouse for recording or filing, when done as part of a real estate transfer, is the practice of law and must be done under the supervision of a lawyer. The Court emphasized that this "is an aspect of conveyancing and affects legal rights. The appropriate sequence of recording is critical in order to protect a purchaser's title to property." Id. at 434, 19.
In Doe Law Firm v. Richardson, 371 S.C. 14, 636 S.E. 2d 866 (2006), the Court also specified that the disbursements in a residential real estate transaction must be supervised by a lawyer.
Rule 5.5(c)(1) permits lawyers admitted in another United States jurisdiction, and not disbarred or suspended in any jurisdiction, to prepare and file a deed in South Carolina, if "undertaken in association with a lawyer who is admitted to practice in" South Carolina. The Comment to the rule states that for this exception to apply, the South Carolina lawyer "must actively participate in and share responsibility for the representation of the client."
In addition, 5.5(c)(4) authorizes an out-of-state lawyer to prepare and file a deed in South Carolina, if the actions arise out of or are reasonably related to "the lawyer's representation of an existing client in a jurisdiction in which the lawyer is admitted to practice." Thus, an out-of-state lawyer may file a deed in South Carolina in conjunction with the lawyer's representation of an existing client in his or her own jurisdiction.
For a general explanation of when an out-of-state lawyer may practice law in South Carolina, please see FAQ #8.