LOAN DOCUMENTATION PREPARATION AND/OR REVIEW
Texas is a difficult state when it comes to Loan Document Preparation and Review. There are very specific requirements and guidelines regarding the preparation and review of loan documents and as a result the best practice is to have a firm like JOA ensure your documents are legally compliant.
The Independent Bankers Association of Texas (IBAT) recently answered the following questions in their “May Bankers Prepare Loan Documents on Real Estate Secured Loans? Unauthorized Practice of Law?”
Legal Ease Q&As:
1. If we do not charge a fee for document preparation, are we exempt from Chapter 83 requirements?
- The IBAT answered NO to this question.
2. By having a Texas attorney on staff, who has approved the documentation we utilize for residential borrowers, are we absolved from utilizing a Texas attorney for each single-family?
- The IBAT answered NO to this question as well.
The damages for Unauthorized Practice of Law violation under Chapter 83 are:
- recovery of the fee paid;
- damages equal to three times the fee paid; and
- court costs and reasonable and necessary attorney's fees
Historically, the danger of a Texas UPL violation to a lender has been minimal.
However, post TRID there may be a new risk. If a disgruntled borrower can prove a lender did not have a Texas attorney involved in their loan document process they can like receive $200+/- (approximate attorney fee for a simple loan transaction whether charged directly or not), plus “court costs and reasonable and necessary litigation attorney's fees” PLUS A FREE SHOT AT A POSSIBLE TRID VIOLATION the “actual damages” provision now in TRID!!! It is the free shot. Even if they lose their TRID claim, their home-run, they still get their “court costs and reasonable and necessary attorney's fees” for litigation paid for the UPL violation.
The safest best is to have a Texas Attorney prepare and review your documents. JOA has for many years performed document preparation services a variety of clients and we would greatly look forward to having the opportunity to meet your document preparation needs! CONTACT US if you are interested in JOA’s document preparation services.
For $175 (paid by the borrower) we can review the loan documents you produce so you can be compliant with Texas Government Code 83.001. You simply upload those documents to us with either a title commitment or title report and we will:
- review the loan documents for title insurability and Texas Government Code 83.001 purposes, and
- return a Texas attorney review certificate and attorney invoice for $175 to be paid by the borrower at closing
Typical turnaround time for this service is 2 hours. This service and pricing does not include any other audit or review service. Additional review services like survey, POA, trust and land lease reviews are not included for that price, but are available from us upon request for an additional fee.