August 22, 1988 

Honorable H. Earl Hall, Jr. 

Commissioner 

Opinion No. JM-943 

Texas Savings and Loan Department Re: Construction of 

2601 North Lamar, Suite 201 V.T.C.S. art. 320f 

Austin, Texas 78705 (RQ-1434) 

Dear Mr. Hall: 

The 70th Legislature enacted S.B. 1075, codified as 

article 320f, V.T.C.S., and effective on September 1, 1987. 

you ask two questions about this new statute: 

1. Will a Texas Savings and Loan Association (hereinafter Association) be construed 

to be charging either directly or indirectly, 

a fee in violation of Art. 320f when in 

connection with any loan the association 

makes when it: 

(i) is an ,interested and/or signatory 

party to the instruments evidencing the 

transaction: 

(ii) performs only the clerical task of 

'filling in the blanks' on the appropriate 

loan documents, such documents having been 

previously prepared and selected by its 

attorneys for use in such situations: 

(iii) charges interest on the loan, 

loan origination fees, application fees 

and other incidental fees normally 

associated with extending a loan: and 

(iv) specifically does not intend to 

and does not charge a fee for the preparation of the documents. 

2. May the prohibition against charging 

fees as provided in Art. 320f be fully or 

partially waived by written and/or oral 

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Honorable H. Earl Hall, Jr. - Page 2 :(JM-943) 

agreement of the parties, lender and 

customer? 

The statute provides as follows: 

Definition 

Sec. 1. In this Act, 'person' has the 

meaning given that term by Subdivision (2) I 

Section 311.005, Code Construction Act 

(Chapter 311, Government Code). 

Prohibited Acts 

Sec. 2. (a) A person, other than an 

attorney licensed in this state, may not 

charge or receive, either directly 

indirectly, any compensation for all or a:; 

pa* a5 tie-prepar&iun o% a Ye-gal instrumeni 

affecting title to real property, including a 

deed, deed of trust, note, mortgage, and 

transfer or release of lien. 

(b) This section does not prevent a person 

from seeking reimbursement for costs incurred 

by the person to retain a licensed attorney 

to prepare an instrument. 

(c) Nothing in this Act shall be construed 

to prevent an attorney from paying secretarial, paralegal, or other ordinary and reasonable expenses necessarily and actually 

incurred by the attorney for the preparation 

of legal instruments nor does it prevent a 

person from completing lease or rental forms 

which have been prepared by an attorney 

licensed in this state and approved by such 

attorney for the particular kind of 

transaction involved, or which have been 

prepared by the property owner or prepared by 

an attorney and required by the property 

owner. The provisions of this Act do not 

apply to a licensed real estate broker or 

salesman performing the acts of a real estate 

broker pursuant to the provisions of The Real 

Estate License Act (Article 6573a, Vernon's 

Texas Civil Statutes). 

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Honorable H. Earl Hall, Jr. - Page 3 m-943) 

(d) Cumulative Remedies. The provisions 

of this Act are not exclusive and in no way 

limit or restrict the definition of the 

practice of law contained in the State Bar 

Act (Article 320a-1, Vernon's Texas Civil 

Statutes), nor do the provisions of this Act 

limit or restrict any remedy provided in the 

State Bar Act or any other law designed to 

eliminate the unauthorized practice of law by 

lay persons and lay agencies. 

Recovery 

Sec. 3. A person who pays a fee prohibited by this Act may bring suit for and is 

entitled to: 

(1) recovery of the fee paid: 

(2) damages equal to three times the fee 

paid; and 

(3) court costs and reasonable and 

necessary attorney's fees. 

Unauthorized Practice of Law 

Sec. 4. A violation of this Act constitutes the unauthorized practice of law and 

may be enjoined by a court of competent 

jurisdiction. 

Transition 

Sec. 5. This Act applies only to fees 

charged or received on or after the effective 

date of this Act. 

your first question is whether a lender violates 

article 320f if it 1) is a party to the transaction: 2) only 

"fills in the blanks" on legal instruments prepared by an 

attorney: 3) charges interest and fees for the loan: but 

4) does not charge a fee for preparing legal instruments 

affecting title to real property. 

The purpose of article 320f is to prevent the 

unauthorized practice of law that occurs when a person other 

than an attorney-prepares legal instruments affecting title 

to real property. & Carroll v. Bullock, 530 S.W.2d 135, 

136 (Tex. Civ. App. - Austin 1975, no writ): V.T.C.S. art. 

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Honorable H. Earl Hall, Jr. - Page 4 UK-943) 

320f, 5 2(d) and 8 4; Bill Analysis, Tex. S.B. 1075, 70th 

Leg. (1987). Whether such a person is a party to the real 

estate transaction to which the legal instruments relate is 

irrelevant to applying the statute, which by its terms 

covers u person, including parties to the transaction. 

For example, the legislative history quite plainly shows 

that the statute was meant to apply to lenders. &&8 Bill 

Analysis, Tex. S.B. 1075, 70th Leg. (1987). 

Since prohibiting a charge for the preparation of a 

legal instrument by a person other than'an attorney is 

merely a way to curb the unauthorized practice of law, what 

is meant in article 320f by the 'preparation of legal 

instruments" must be decided with reference to the practice 

of law. Whether the completion by clerks of standard forms 

prepared by attorneys for routine transactions is "practicing law" will always be a factual and often a close guestion. See 7 Tex. Jur.3d Attcrnevs at Law § 10. Although we 

cannot decide fact questions, we can make some general 

~observations. While the mere act of recording a borrower's 

responses to the questions on a standard form probably does 

not require legal skill or knowledge and would therefore not 

be practicing law, the act of determining whether the forms 

should be employed at all probably does require legal skill 

or knowledge and would therefore be practicing law. See 

Unauthorized Practice Committee v. Cortez 692 S.W.2d 47, 50 

(Tex. 1985), cert. denied, 106 S.Ct. 384 i1985). 

By prohibiting a charge by a person other than an 

attorney for "all or anv Dart of the preparation of a legal 

instrument," article 320f envisages a liberal interpretation 

of what constitutes practicing law. Based on the all-orany-part formulation, we conclude that at least when a fee 

is charged, the legislature intended there be little room 

for a person other than a lawyer to have any role in 

completing the papers necessary to affect title to real 

property. 

Assuming that a fee is charged, just what a person 

other than an attorney can do before violating article 320f 

will depend on exact factual circumstances. For example, we 

assume no one would argue that a secretary who types a document and charges for his effort has prepared "all or any 

part" of a legal instrument and thus violated article 320f. 

Similarly, if a lawyer 1) determines that certain transactions can be conducted by lqf$lling in the blanks" on 

standard forms; 2) prepares the standard forms: and 3) 

reviews a particular transaction to ensure that the standard 

forms are appropriate, then it may not violate article 320f 

for a lender to have a clerk "fill in the blanks" and for 

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Honorable H. Earl Hall, ~Jr. - Page 5 m-943) 

the lender to charge for this clerical service. Indeed, 

section 2(c) of article 320f contemplates something similar 

with regard to the lease or rental of real property. As we 

have already noted, however, we cannot resolve the fact 

questions raised by.this hypothetical. 

Of course, article 320f only applies if a fee is 

charged. Whether a fee is charged is another fact question. 

By way of general observation, we note that by prohibiting 

any compensation, direct or indirect, article 320f envisages 

a liberal interpretation of what constitutes compensation. 

In your question you posit that no fee is charged for the 

preparation of legal instruments, but that interest and 

other fees are charged. We can only caution that for the 

preparation of legal instruments if compensation for the 

work of persons other than an attorney is recouped in a 

charge, no matter what it is labeled, then article 320f 

applies. In the context of a title company, the Supreme 

Court has taken an extremely liberal view of what constitutes a charge for the preparation oft legal documents. See 

Hexter Title h Abstract Co. v. Grievance Committee, 179 

S.W.Zd 946, 952 (Tex. 1944). 

As for your second question, the answer is that parties 

to an agreement that requires preparation of a legal instrument affecting title to real property cannot waive article 

320f. The statute does not provide for waiver. Moreover, 

waiver is inimical to the statute's purpose -- preventing 

the unauthorized practice of law. In enacting the statute, 

the legislature was concerned about protecting the public 

interest in clear real estate titles. The statute is 

designed to deter nonlawyers from drafting legal instruments 

and perhaps clouding title by a legal error. @B Hearings 

on Tex. S.B. 1075 before the Senate Jurisprudence comm., 

70th beg. (April 21, 1987) (tape 3) (available from Senate 

Staff Services). When a statute is designed to protect the 

public interest, it cannot be waived by private parties. 

When enacting this statute, the legislature was also 

concerned about protecting consumers from fees for legal 

work done by nonlawyers. Id. Presumably sellers or lenders 

in real estate transactions often have greater bargaining 

power than buyers or borrowers. This statute, therefore, 

prevents the stronger party (the seller or lender) from 

extracting fees from the weaker party (the buyer or lender). 

When a statute is designed to protect a party with less 

bargaining power, it cannot be waived. If it could, then 

the stronger party would merely require waiver of the weaker 

party, thereby thwarting the purpose of the statute. se 

N. Singer, 2A Sutherland Statutory Construction s 55.08 (4th 

ed. 1984); 60 Tex. Jur.2d Waiver 5 10. 

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Honorable H. Earl Hall, Jr. - Page 6 (JM-943) 

SUMMARY 

What constitutes the preparation of 

legal instruments within the meaning of 

article 320f is a fact question. What constitutes the charging of a fee within the 

meaning of article 320f is a fact question. 

Parties to a transaction cannot waive article 

320f. 

JIM MATTOX 

Attorney General of Texas 

MARYKKLLER 

First Assistant Attorney General 

LQU MCCRHARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by F. Scott McCown 

Assistant Attorney General 

.- 

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