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Make Sure You Hire a Law Firm to Assist With
You Loan Modification
Unfortunately, if you search the internet for information about
Loan Modification, you will find numerous websites claiming to
be able to assist you with a loan modification of your existing
loan contract and negotiate different terms on your behalf. Their
claims are absolutely false.
The truth is that only a lawyer can advise you on how to
modify your existing contract with your lender and only a law firm
can negotiate on your behalf. Only a law firm can provide
you advice on your legal rights concerning a contract. Anyone
who offers advice on what a third party (i.e. another person) should
do or can do concerning that person’s contract is the practice
of law and must be a law firm.
As set forth in the Supreme Court decision Perkins v. CTX
Mortgage Co. 137 Wn.2d 93 (1999)
The practice of law includes the selection and completion
of legal instruments by which legal rights and obligations are
established. It is established that the selection and preparation
of promissory notes and deeds of trust is the practice of law.
Perkins at
page 97.
The Perkins Supreme Court also provided on page 98 of their
ruling as follows:
We have firmly rejected the notion that a lay person's authority
to prepare legal instruments turns on whether a fee is charged.
In Great Western, the unanimous court held that a
bank, by selecting and completing legal documents, including
promissory notes and deeds of trust, engaged in the unlawful
practice of law where a lay employee filled out the documents and
the bank charged a fee for the service. After resolving that the
bank had engaged in the practice of law, the court considered
whether such actions were unauthorized.
A lawyer shall not: "[a]ssist a person who is not a member
of the Bar in the performance of activity that constitutes the unauthorized
practice of law." RPC 5.5(b). "It is the duty of
the court 'to protect the public from the activity of those who,
because of lack of professional skills, may cause injury whether
they are members of the bar or persons never qualified for or admitted
to the bar.'" Bennion, Van Camp, Hagan & Ruhl v. Kassler
Escrow, Inc., 96 Wn.2d 443, 447,
635 P.2d 730 (1981) (quoting Wash. State Bar Ass'n v. Great
W. Union Fed. Sav. & Loan Ass'n, 91
Wn.2d 48, 60, 586 P.2d 870 (1978)). RCW 2.48.180 provides criminal
penalties for the practice of law without bar membership: "Unlawful
practice of law is a crime. A single violation of this section
is a gross misdemeanor." RCW 2.48.180(3).
Complete Text of Majority Opinion of Washington Supreme Court
Case Perkins v. CTX Mortgage Co. 137 Wn.2d 93 (1999) below:
Argued January 14, 1998. Decided January 7, 1999.
[1] Attorney and Client - Practice of Law - What Constitutes -
Preparation of Documents. The practice of law includes the selection
and completion of legal instruments by which legal rights and obligations
are established.
[2] Attorney and Client - Practice of Law - What Constitutes -
Preparation of Notes and Deeds. The practice of law includes
the selection and completion of promissory notes, deeds of trust,
and other legal documents necessary for the execution of a residential
home loan transaction.
[3] Attorney and Client - Practice of Law - Unauthorized Practice
- Legal Documents - Fee Charged for Services - Effect. Whether
or not a layperson's participation in the preparation of a legal
document on behalf of another person constitutes the unauthorized
practice of law does not depend upon whether a fee is charged
for the document preparation. It is the nature and character of
the service rendered by the layperson, not the fact of compensation,
that determines whether the layperson has engaged in the unauthorized
practice of law.
[4] Attorney and Client - Practice of Law - Unauthorized Practice
- Public Interest - In General. The underlying goal in unauthorized
practice of law cases is the promotion of the public interest.
That is why the courts have prohibited only those activities that
involve the lay exercise of legal discretion on behalf of others
because of the potential for public harm. Convenience and low cost
are additional public interests that are implicated by unauthorized
practice of law cases.
[5] Attorney and Client - Practice of Law - Unauthorized Practice
- Legal Documents - Objective Data - Clerical Entry. A layperson's
clerical entry of objective data into a legal form prepared on
behalf of another does not involve the exercise of legal discretion
and, therefore, does not constitute the unauthorized
practice of law.
[6] Attorney and Client - Practice of Law - Unauthorized Practice
- Legal Documents - Balancing Test. An allegation that a layperson's
participation in the preparation of a legal document constitutes
the unauthorized practice of law is analyzed
by balancing the competing public interests of (1) protecting the
public from the harm of the lay exercise of legal discretion and
(2) promoting convenience and low cost.
[7] Attorney and Client - Practice of Law - Unauthorized Practice
- Legal Documents - Home Loan Documents - Lay Participation. Regardless
of whether a fee is charged for the service, a mortgage lender
does not engage in the unauthorized practice
of law by having lay employees participate in the preparation
and completion of residential home loan documents on behalf of
the lender's clients if the lay employees do not exercise any legal
discretion in performing their duties.
MADSEN and ALEXANDER, JJ., dissent by separate opinion.
Nature of Action: Mortgage loan borrowers sought a declaration
that a mortgage loan company's practice of
charging a fee for the production and completion
of residential home loan documents constituted the unauthorized
practice of law. The plaintiffs also claimed that the mortgage
loan company's alleged unauthorized practice
of law violated the Consumer Protection Act.
DURHAM, C.J. - At issue is whether a mortgage lender engages
in the unauthorized practice of law by charging
a fee for the production and completion of residential home loan documents.
The trial court dismissed the Plaintiffs' class action, concluding that charging
a fee for the production of such documents is not the unauthorized
practice of law where lay employees participating in such document preparation
do not exercise any legal discretion. We agree and affirm.
Ed and Jeanne Perkins borrowed money from
CTX Mortgage Company (CTX) to purchase their home. CTX charged
a $250 "document preparation" fee. The fee is not charged
with respect to any particular document.(fn1) Instead, it is charged
to offset the overhead associated with the preparation of the extensive
documentation necessary to process and complete loan transactions.
CTX prepared various legal and nonlegal documents necessary to
process and complete the Perkinses' loan.(fn2) In preparing these
documents, CTX attorneys performed all tasks requiring the exercise
of legal judgment. For example, CTX attorneys selected the loan
products, created the documents necessary for each loan product,
and supervised the programming of CTX's central computer, which
generates form templates in the branch offices. At the branch offices,
lay employees entered customer information such as Social Security
numbers, employer information, and bank account numbers in response
to computer prompts depending on the type of loan the Perkinses
had selected. Lay employees also entered the loan amount, interest
rate, down payment,
------ Begin Footnote ------
(fn1) Decl. of Larry J. Smith Re Exs. in Supp. of Def's
Summ. J. Mot. at Ex. A-19 this declaration is designated part of the Clerk's
Papers, but was transmitted as an original without Clerk's Papers indexing
numbers).
(fn2) CTX prepared the following documents: (1) Uniform
Residential Loan Application; (2) Truth in Lending Disclosure Statement; (3)
Adjustable Rate Mortgage Truth in Lending Disclosure; (4) Authorizations to
Verify Employment, Income Asset Balances and Credit History; (5) Good Faith
Estimate of Charges; (6) Request for Verification of Deposit; (7) Request for
Verification of Employment; (8) Request fur Verification of Rent or Mortgage
Account; (9) Appraisal Order Form; (10); Bequest for Verification of Deposit;
(11) Tax Information Sheet; (12) Interoffice Communication; (13) Underwriting
Action; (14) Assignment of Lien to Texas Commerce Bank; (15) Assignment of
Lien to Fleet Real Estate Funding Corp.; (16) Assignment of Lien (Fleet Real
Estate to the Federal National Mortgage Association (FNMA); (17) Mortgage Loan
Closing Instructions; (18) Adjustable Rate Note; (19) Adjustable Rate Rider;
(20) Deed of Trust; (21) Property Appraisal Disclaimer: (22) Borrower's Affidavit
and Agreement; (23) Borrower's Agreement to Correct Errors and Omissions; (24)Signature
Certifications; (25) Identity Certificates: (26) Seller's and/or Purchaser's
Statement; (27) Truth in Lending Disclosure Statement; (28) Calculation of
Amount Financed for Truth in Lending Disclosure; (29) Request for Taxpayer
Identification Number and Certification; (30) Occupancy Affidavit and Financial
Status; (31) Errors and Missing Document Report; (32) Letter Regarding Physical
Defects Corrected; (33) First Payment Letter; (34) Conventional Delivery Transmittal;
(35) Hazard/Flood Insurance Endorsement Letter; (36) Fleet Funding Delivery
Transmittal; (37) Transmittal Summary to FNMA.
------ End Footnote ------
and other factual data. Attorneys prepared
the other documents requiring the exercise of legal judgment. For
example, the Perkinses' attorneys prepared the purchase and sale
agreement, the earnest money agreement, the HUD-1, the excise tax
affidavit, the warranty deed, and the escrow instructions.
The Perkinses filed a class action in King County Superior
Court on behalf of CTX borrowers who were or would be charged a document preparation
fee. They sought a declaratory judgment that CTX engaged in the unauthorized
practice of law by charging such a fee for the preparation of loan documents.
They further argued that such unauthorized practice
of law violated the Consumer Protection Act, RCW 19.86 (CPA). The trial
court certified the class as consisting of CTX borrowers who had paid a fee
for loan documents prepared by CTX and all such future borrowers. After discovery,
both parties moved for summary judgment, which was granted in favor of CTX,
dismissing the Perkinses' claims. The Perkinses moved for reconsideration,
which was denied, before appealing to the Court of Appeals. CTX moved for direct
review by this court, which was granted.
I
[1, 2] The Perkinses contend that CTX engaged in the practice
of law by selecting and completing the various documents necessary to process
the Perkinses' residential home loan. This cannot be seriously disputed. The
practice of law includes the selection and completion of legal instruments
by which legal rights and obligations are established. Washington State Bar
Ass'n v. Great W. Union Fed. Sav. & Loan Ass'n, 91 Wn.2d 48, 54-55, 586
P.2d 870 (1978) (Great Western}; see also In re Discipline of Broker, 59 Wn.2d
707, 370 P.2d 242 (1962); Washington State Bar Ass'n v. Washington Ass'n of
Realtors, 41 Wn.2d 697, 251 P.2d 619 (1952) (WSBA v. WAR). It is established
that the selection and preparation of promissory notes and deeds of trust is
the practice of law. Great Western, 91 Wn.2d at 55. CTX
and amicus Washington Mortgage Lenders Association
would have us focus only on the data inputting tasks that lay employees
perform. However, CTX's attorneys created the loan documents and
helped program CTX's computer system to select the appropriate
document templates. Regardless of how CTX allocates tasks between
attorney employees and lay employees, CTX employees select and
complete those legal documents incident to residential home financing.
Thus, CTX engaged in the practice of law by selecting and preparing
the various legal documents involved in this case. The question
then becomes whether such activities are authorized.
II
[3] Both the Perkinses and the Washington State Bar Association
(WSBA) contend that mortgage lenders are authorized to prepare the legal instruments
necessary to complete loan transactions as long as they do so without charge.
But they argue that CTX's otherwise permissible loan document preparation became
unauthorized upon the charging of a fee.(fn3) This preoccupation with the fee
is misplaced. We have firmly rejected the notion that a lay person's authority
to prepare legal instruments turns on whether a fee is charged.
In Great Western, the unanimous court held that a bank,
by selecting and completing legal documents, including promissory notes and
deeds of trust, engaged in the unlawful practice of law where a lay employee
filled out the documents and the bank charged a fee for the service. After
resolving that the bank had engaged in the practice of law, the court considered
whether such actions were unauthorized.
------ Begin Footnote ------
(fn3) Br. of Appellant at 9 ("What converts the practice
from authorized under the pro se exception (as CTX is a party to the loan and
authorized to prepare its own documents) to the unauthorized
practice of law is the charging of a fee to the plaintiffs of $250.00.")
(emphasis omitted); Br. of Amicus Curiae WSBA at 18 ("CTX Could Use Non-Lawyer
Employees To Complete Legal Documents Under The Pro Se Exception If CTX Did
Not Charge A Fee For Legal Services.") (emphasis omitted).
------ End Footnote ------
[W]e have recognized that a party to a legal
document may select, prepare or draft that document without fear
of liability for unauthorized practice. This exception to our general
prohibition against the practice of law by laypersons is analogous
to the "pro se" exception for court proceedings. Both
exceptions are founded upon the belief that a layperson may desire
to act on his own behalf with respect to his legal rights and obligations
without the benefit of counsel.
The "pro se" exceptions are quite limited and
apply only if the layperson is acting solely on his own behalf. Moreover, a
layperson who receives compensation for such legal services may not rely upon
the "pro se" exception. The receipt of compensation is conclusive
evidence that the layperson is not merely acting for himself but has assumed
the additional burden of acting for another.
Great Western, 91 Wn.2d at 56-57 (citations omitted) (emphasis
omitted). Thus, the court held that by charging a fee, Great Western "removed
itself from the protection afforded by our 'pro se' exception to the general
prohibition against the unauthorized practice of law." Great
Western, 91 Wn.2d at 57-58. The Perkinses contend that Great Western is squarely
on point. However, our next unauthorized practice of
law case cogently explains how the fee issue in Great Western was irrelevant
to the unauthorized practice of law question.
In Hagen & Van Camp, PS. v. Kassler Escrow, Inc.,
96 Wn.2d 443, 635 P.2d 730 (1981), a law firm sued to enjoin an escrow company
from preparing earnest money agreements and other acts as the unauthorized
practice of law. The unanimous court rejected the proposition that, by
not charging a fee, the escrow company's actions were authorized under Great
Western.
Petitioner relies heavily upon the fact that no additional
charges were made for the services. Petitioner relies on the holding in Great
Western to support this aspect of its argument. Such reliance is misplaced.
Great Western did charge a fee so the court expressly limited its holding in
the case to a situation where a fee is charged. The fact of compensation is
irrelevant, however, except as to provide
evidence of the fact that a lay person is acting for another. We
have clearly held that it is the nature and character of the service
rendered rather than the fact of compensation for it that governs.
Kassler Escrow, 96 Wn.2d at 451 (citations omitted) (emphasis
added).
Notwithstanding this unambiguous language, both the Perkinses
and amicus WSBA rely on our next and last unauthorized
practice of law case, Cultum v. Heritage House Realtors, Inc., 103 Wn.2d
623, 694 P.2d 630 (1985), as further support for the proposition that charging
a fee for the preparation of legal documents by lay persons is unauthorized.
In Cultum, a real estate agent prepared an earnest money
agreement setting forth the buyer's offer to purchase a home. The buyer asked
the agent to insert a structural Inspection contingency clause. The agent inserted
the standard clause used by her employer. Both the clause and the preprinted
earnest money agreement were drafted by lawyers. After the inspection revealed
some minor problems, the buyer sought to rescind the offer pursuant to the
inspection contingency based on her subjective dissatisfaction. The seller
refused to rescind and construed the inspection contingency to require major
structural defects based on an objective standard before it could be invoked.
The buyer finally recovered her earnest money and sued the real estate company,
seeking among other things an injunction against their alleged unauthorized
practice of law.
The court held that, although the real estate agent engaged
in the practice of law, her actions were not unathorized. The court was divided
four to four, however, on the rationale. The lead opinion ruled narrowly:
It should be emphasized that the holding in this case
is limited in scope. Our decision provides that a real estate broker or salesperson
is permitted to complete simple printed standardized real estate forms, which
forms must be approved by a lawyer, it being understood that these forms shall
not be used for other than simple real estate transactions which arise
in the usual course of the broker's business
and that such forms will be used only in connection with real estate
transactions actually handled by such broker or salesperson as
a broker or salesperson and then without charge for the simple
service of completing the forms.
Cultum, 103 Wn.2d at 630 (emphasis added). The Perkinses
emphasize the "without charge" language without discussion, apparently
assuming that a charge would render the action unauthorized. Br. of Appellants
at 22. Amicus WSBA similarly suggests that the Cultum court relied on the fact
that there was no separate charge levied. Br. of Amicus Curiae WSBA at 13.
Both the Perkinses and the WSBA are mistaken.
The lead opinion necessarily confined its holding to the
facts of the case. The realty company did not charge a fee; therefore, the
court could only have speculated in dictum whether the charging of a fee would
have rendered the realty company's actions unauthorized. The court, therefore,
properly left open the question of whether a fee would have changed the result.
Moreover, any suggestion in the lead opinion that the
fee issue was dispositive failed to carry a majority. Granted, four justices
reasoned that "[t]he fact that brokers and salespersons will complete
these forms at no extra charge, whereas attorneys would charge an additional
fee, weighs heavily toward allowing this choice." Cultum, 103 Wn.2d at
628-29. However, the other four justices agreed in the result only and disagreed
with the lead opinion's rationale. "[T]he fact that the agreement is completed
without charge is irrelevant." Cultum, 103 Wn.2d at 634 (Brachtenbach,
J., concurring). Thus, Cultum does not stand for the proposition that charging
a fee for the lay preparation of legal documents amounts to the unauthorized
practice of law.
The rule remains that "[t]he nature and character
of the service rendered, rather than the fact of compensation for it, should
govern its classification and relation to the public interest." WSBA v.
WAR, 41 Wn.2d at 699; see also Great Western, 91 Wn.2d at 54 ("It is the
nature and character of
the service performed which governs whether
given activities constitute the practice of law."). CTX is
not asserting its actions are authorized under the pro se exception;
therefore, it unnecessary to look to the document fee to rebut
a claim that CTX was acting solely on its behalf. Thus, whether
CTX charged a fee is irrelevant to the question of whether they
have engaged in the unauthorized practice
of law. Instead, the essential inquiry is whether a mortgage
lender is authorized to prepare the legal documents that are ordinarily
incident to its financing activities when lay employees participating
in such document preparation do not exercise any legal discretion.
III
[4, 5] CTX argues that its activities are authorized because
lay employees do not exercise any legal discretion during their participation
in the document preparation process. Thus, there is no risk of public harm
from incompetent lawyering. We are persuaded that this position is consistent
with our historical approach to the unauthorized practice
of law.
Admittedly, we have often spoken broadly in condemning
the practice of lay persons selecting and completing preprinted form legal
documents. However, this broad language must be considered in light of the
particular circumstances at issue in those cases. Our underlying goal in unauthorized
practice of law cases has always been the promotion of the public interest.
Consequently, we have prohibited only those activities that involved the lay
exercise of legal discretion because of the potential for public harm.
In WSBA v. WAR, this court rejected a broker's argument
that he had merely filled in the blanks in form legal documents, stating:
The representation of qualification and competence to
do work of a legal nature and to advise upon that subject . . . is implicit
in the preparation of any legal document by the selection and completion of
a blank form . . . .
WSBA v. WAR, 41 Wn.2d at 701. Despite this broad
language, however, the court ruled very narrowly,
enjoining the broker from doing only the type of work he performed
with one particular deed. WSBA v. WAR, 41 Wn.2d at 701. In that
deed he had drafted and inserted an ambiguous clause regarding
mortgages to which the property was subject. WSBA v. WAR, 41 Wn.2d
at 698. The concurrence pointed out that by limiting its holding,
the majority tacitly approved of the broker's other activities
in which he filled in the names of parties and other objective
information. WSBA v. WAR, 41 Wn.2d at 702 (Donworth, J., concurring).
This result is not surprising given that the court's guiding principle
was to protect against "[t]he probability of injurious consequences
from the acts of the unskilled." WSBA v. WAR, 41 Wn.2d at
699. The potential harm of allowing lay persons to draft clauses
was manifested in the uncertainty regarding the number and value
of mortgages to which the property was subject. In contrast, the
court allowed the mere inputting of objective data because of the
unlikelihood that such action would significantly prejudice individuals'
legal interests.
In In re Discipline of Broker, 59
Wn.2d 707, 370 P.2d 242 (1962), the court held that lay employees of an
escrow company engaged in the unauthorized practice
of law by completing form legal documents. The court observed that "the
preparation of a legal form is doing work of a legal nature, and if done by
a . . . layman, may be enjoined." Droker, 59 Wn.2d at 719. Yet, the lay
employees went far beyond entering objective data into these forms. The employees
drafted escrow instructions, selected the forms they deemed appropriate for
various transactions, drafted earnest-money receipts, drafted clauses modifying
form legal documents, and explained to buyers and sellers the meaning and effect
of the documents they drafted. Droker, 59 Wn.2d at 719. It is self-evident
that the public policy concern of guarding against incompetent lawyering is
well served by our prohibiting such activities by lay persons.
In Great Western, this court held that a bank had engaged
in the unauthorized practice of law by permitting
a lay
employee to select and complete form legal
documents involved in closing both the real estate loan between
it and the buyer, and the sale between the buyer and the seller.
The court concluded that "the selection and completion of
form legal documents, or the drafting of such documents, including
deeds, mortgages, deeds of trust, promissory notes and agreements
modifying these documents constitutes the practice of law." Great
Western, 91 Wn.2d at 55. Yet, the lay employee at issue went well
beyond the mere inputting of data. She modified the form deeds
of trust and promissory notes, and closed both the loan and the
sale between the purchaser and seller. Great Western, 91 Wn.2d
at 50. The court observed that "[t]he services at issue here
are ordinarily performed by licensed attorneys, involve legal rights
and obligations, and by their very nature involve the practice
of law." Great Western, 91 Wn.2d at 55. The court's decision
rested firmly on the public interest rationale.
It is our duty to protect the public from the activity
of those who, because of lack of professional skills, may cause injury whether
they are members of the bar or persons never qualified for or admitted to the
bar.
Great Western, 91 Wn.2d at 60-61 (citation omitted). This
same public policy language guided our two subsequent unauthorized
practice of law cases. See Hagen & Van Camp, P.S. v. Kassler Escrow,
Inc., 96 Wn.2d 443, 447, 635 P.2d 730 (1981); Cultum v. Heritage House Realtors,
Inc., 103 Wn.2d 623, 627, 694 P.2d 630 (1985).
The deciding principle in each of these cases is our duty
to protect the public from the potential harm of the lay exercise of legal
discretion. But we have never prohibited the mere clerical entry of data into
a printed legal form.(fn4) Indeed, we have tacitly authorized lay persons to
fill in the
------ Begin Footnote ------
(fn4) The dissent argues that Cultum v. Heritage House
Realtors, Inc., 103 Wn.2d 623, 694 P.2d 630 (1985)
demonstrates that the entry of customer information into standardized legal
forms requires the exercise of legal discretion. Dissent at 110. Yet, in Cultum,
a real estate agent did not merely enter customer information into a standardized
earnest money agreement. Rather, the agent inserted an inspection contingency
clause, which purported to establish the legal basis upon which the purchaser
could rescind the agreement.
------ End Footnote ------
names of parties, the legal descriptions
of properties, and other similar information(fn5) and have expressly
left open whether mere scrivening would constitute the unauthorized
practice of law.(fn6)
Most recently, we have even authorized nonlawyers to exercise
some legal discretion by allowing them to insert lawyer drafted clauses into
lawyer drafted real estate forms. Cultum, 103 Wn.2d at 630. The Cultum lead
opinion was persuaded that the strong public interest in convenience and limiting
costs weighed in favor of allowing real estate professionals to prepare the
legal instruments necessary for conveyancing. Cultum, 103 Wn.2d at 628. Likewise,
the concurrence's pragmatic concern that certain real estate practices are "fact[s]
of life in the real world" implicitly recognizes the logistical and financial
burden on the public that would result from imposing lawyers on every stage
of real estate conveyancing. Cultum, 103 Wn.2d at 636 (Brachtenbach, J., concurring).
Thus, our decision should also be guided by the public interest in convenience
and low cost.
[6, 7] The resolution of this case, therefore, depends
on balancing the competing public interests of (1) protecting the public from
the harm of the lay exercise of legal discretion and (2) promoting convenience
and low cost. Washington unauthorized practice of law cases
are replete with instances of lay exercise of legal discretion causing public
------ Begin Footnote ------
(fn5) Washington State Bar Ass'n v. Washington Ass'n of
Realtors, 41 Wn.2d 697, 702, 251 P.2d 619 (1952)
(Donworth, J., concurring).
(fn6) Washington State Bar Ass'n v. Great W. Union Fed.
Sav. & Loan Ass'n, 91 Wn.2d 48, 60, 586 P.2d 870 (1978) (Great Western).
Despite the Perkinses' suggestion that Great Western rejected the "scrivener
defense," Br. of Appellants at 14, the court expressly declined to address
this amicus argument because "[t]he unchallenged findings of fact demonstrate
that Great Western did in fact select the deed form and thus did not act merely
as a 'scrivener.'" Great Western, 91 Wn.2d at 60.
------ End Footnote -----
harm.(fn7) Yet, when the role of lay persons
in selecting and completing form legal documents is reduced to
entering objective data, the lay person's actions are unlikely
to result in the uncertain legal rights with which this court has
been concerned. Thus, the risk of public harm is low. Indeed, the
Perkinses have never alleged that their loan documents were deficiently
drafted or that their legal rights were prejudiced in the least.
Moreover, permitting mortgage lenders to prepare loan
documents in the way the CTX does relieves borrowers of the cost and inconvenience
of having attorneys prepare their loan documents. Ironically, were the Perkinses
to prevail, future borrowers would bear the additional cost of having attorneys
prepare their loan documents, which would likely exceed that portion of the
Perkinses' document preparation fee attributable to legal documents.
Thus, we hold that, whether or not a fee is charged, lenders
are authorized to prepare the types of legal documents that are ordinarily
incident to their financing activities when lay employees participating in
such document preparation do not exercise any legal discretion. Moreover, even
though the Perkinses have not alleged any harm, in order to fully safeguard
the public interest we further hold that lenders must comply with the standard
of care of a practicing attorney when preparing such documents. See Cultum,
103 Wn.2d at 631; Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 586-87,
675 P.2d 193 (1983). Our result necessarily disposes of the CPA claim. The
trial court dismissal of the Perkinses' class action is affirmed.
------ Begin Footnote ------
(fn7) See Cultum, 103 Wn.2d at 626 (buyer's earnest money
refund delayed because real estate agent prepared ambiguous contingency clause);
Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581,
591-92, 675 P.2d 193 (1983) (seller unable to execute against property upon
buyer default because escrow agent prepared unsecured promissory note); Hogan
v. Monroe, 38 Wn. App. 60, 62, 684 P.2d 757 (1984)
(lessors' repossession rights inadequately protected by lease-option agreement
drafted by real estate agent); Hecomovich v. Nielsen, 10
Wn. App. 563, 518 P.2d 1081, review denied 83 Wn.2d 1012 (1974) (seller
unable to recover personalty upon buyer default because real estate agent failed
to provide for personalty in real estate sales contract).
------ End Footnote ------
DOLLIVER, SMITH, GUY, JOHNSON, TALMADGE,
and SANDERS, JJ., concur.
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