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Turner v. First Union National Bank

314 N.J. Super. 33, 713 A.2d 1068 (App. Div. 1998)

MORTGAGES; ATTORNEYS FEES—Even if a borrower is not represented by an attorney, it is liable for payment of its lender’s attorney’s fees for review of loan and title documents.

The defendants in these consolidated matters were lenders authorized under the laws of the United States and New Jersey to make mortgage loans. Under a New Jersey statute, a lender’s attorney fees may not be passed along to the borrower, “except to the extent of a fee for the review of the documents prepared or submitted by or at the direction of the borrower’s attorney or such other work or services as requested by the borrower’s attorney.” In one case, the borrower claimed that he did not have to pay the lender’s attorneys fees because he was not represented by counsel. The lower court found for the borrower, noting that the language of the statute mentioned documents “prepared or submitted at the direction of the borrower’s attorney” and that this precluded the lender from receiving fees when the borrower is not represented by counsel. The Appellate Division reversed, noting that it would be an absurd result to allow a charge to borrowers who are represented by counsel, but not charge borrowers without counsel when the statute encourages the borrower to retain counsel. In the other cases, the borrowers contended, and the lower court agreed, that it was impermissible under the statute for lenders to charge attorney review fees. In reversing the lower court, the Appellate Division held that the statute was clear by its express terms that a lender may pass along its attorney’s fees to the borrower for review of the “loan documents.” This is so whether the loan documents are simply forwarded to the lender at the direction of the borrower’s attorney, in the case of a title search or survey, or where the borrower’s attorney drafts or prepares a promissory note or loan agreement. Both are to be treated the same no matter how much or how little work the submission creates for the lender’s attorney.


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