Federal Trade Commission and DOJ Urge Rhode Island Legislature To Continue Allowing Non-Lawyers to Close Real Estate Deals

The Federal Trade Commission and U.S. Department of Justice (DOJ) issued a letter on March 28, 2003, urging the Rhode Island House of Representatives to reject two proposed bills that would prevent non-lawyers from competing with lawyers to perform real estate closings. The agencies expressed concern that the bills would likely cause Rhode Island consumers and businesses to pay more for real estate closings and prevent them from benefitting from competition from out-of-state and Internet lenders that could provide more convenient closing services.

Currently, non-lawyers compete with lawyers to close real estate deals in Rhode Island; the bills would end that history of competition. The bills would eliminate this competition by requiring a lawyer to close almost all real estate deals.

"This bill would likely deprive Rhode Islanders of the significant benefits of competition, such as lower prices, more convenient services, and the option to use inexpensive Internet-based loan services," said Timothy J. Muris, Chairman of the Federal Trade Commission.

"The bill will likely raise prices for Rhode Islanders in two ways," said R. Hewitt Pate, Acting Assistant Attorney General in charge of the Justice Department's Antitrust Division. "Consumers who would not pay for a lawyer would have to do so, and, traditionally, lawyers charge more than lay providers. Second, without competition from non-lawyers, lawyers' fees are likely to increase."

A similar bill was introduced last year but did not become law. The DOJ and the FTC had urged the Rhode Island legislature to reject that bill. The two bills being considered are H. 5639 and H. 5936, both entitled, "An Act Relating To Criminal Offenses - Law Practice," which were referred to the Rhode Island House Judiciary Committee. The bills cover virtually all real estate transactions, including residential and commercial deals and purchases, refinancings, second mortgages and other transactions.

For more information on the letter at the FTC, contact Jerry Ellig, Acting Director of the FTC Office of Policy Planning, at 202-326-3528. For more information on the letter at the DOJ, contact Renata B. Hesse, Chief of the Networks and Technology Section, at 202-307-6200.

Copies of the documents mentioned in this release are available from the DOJ and FTC. The DOJ's Web site is http://www.usdoj.gov/atr; the FTC's Web site is http://www.ftc.gov. Paper copies of the documents are also available from the Justice Department's Antitrust Documents Group and the Federal Trade Commission's Consumer Response Center. The Justice Department's Antitrust Documents Group can be contacted by phone: 202-514-2481, fax: 202-514-3763, or e-mail: atrdocs.grp@usdoj.gov. The FTC's Consumer Response Center can be contacted at Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FTC File No. V020013)