The Tennessee Paradox

1. The parties choose the settlement agent.

Tennessee's residential purchase and sale agreement provides a separate settlement-agency designation for the buyer and for the seller.¹ A seller may not condition the sale on the buyer's use of a particular title insurer (RESPA § 9, 12 U.S.C. § 2608(a)), and a lender may not require that title insurance be purchased through a particular agent or insurer as a condition of the loan (Tenn. Code Ann. § 56-8-106). A real estate licensee's recommendation of a settlement provider is, by the licensee's own disclaimer form, furnished "only as a convenience and a courtesy" (Tennessee REALTORS® form RF 304).

2. Since July 1, 2026, the buyer's designated agency issues the policy.

Public Chapter 769 (2026) added Tenn. Code Ann. § 56-35-135. On a purchase of, or loan secured by, residential property of one to four units, the settlement agency designated by the buyer or borrower in the contract is exclusively authorized to act as the issuing title insurance agency, subject to the lender's approval. The section does not apply to the first sale of new construction or to auction sales, and it cannot be waived.⁴ A companion section, § 56-35-134, requires written disclosure and acknowledgment when two agencies share fees on one closing.⁶ Nothing in either section addresses, limits or displaces the seller's separate designation of a settlement agent or attorney, and nothing in either section speaks to legal representation of any party.

3. A title company cannot represent anyone.

No corporation or association may practice law or do law business in Tennessee,⁷ and "law business" expressly includes advising or counseling any person as to the law for a fee.⁸ A title insurance agency is, by definition and by its agency contract, the agent of the title insurer.⁹ The settlement agent at a lender-financed closing also acts under the lender's written closing instructions. It therefore owes duties to the insurer, to the lender and to the parties as an escrow agent, and may give legal advice to none of them.

4. An attorney at a title company is the title company's attorney.

A lawyer employed or retained by an organization represents the organization.¹⁰ For that lawyer also to represent a buyer or seller, the lawyer must reasonably believe the dual representation can be competent and diligent, the title company must consent, and the party must give informed consent, confirmed in writing, after being told how the dual role could affect the lawyer's judgment.¹¹ The Board of Professional Responsibility has said so directly: paying for the title work does not make a party the title attorney's client, and representing both the company and a party requires full disclosure and consent.¹² When dealing with a party who is not represented, a lawyer may not state or imply that the lawyer is disinterested, and must correct the party's misunderstanding of the lawyer's role when the lawyer knows or reasonably should know of it.¹³ "Attorney-owned," "attorney-led" and "attorney-supervised" are descriptions of the business, not of a client relationship.

5. The paradox, stated.

The same legislature that protected the parties' choice of settlement agent in 2026 had long since provided that a title company cannot practice law. A party who exercises the 2026 right by designating a title company has, by that act, designated an office that is forbidden to advise them. The only designation that produces legal representation is the designation of a lawyer in the lawyer's own practice, under an engagement letter, and the parties' separate contract lines exist so that each side may do exactly that.¹ The fee is not the obstacle: Vanderpool Law, a law firm that offers title services, closes for the same settlement fee a title company charges and represents the party who designates it, under a written engagement.

1. Tennessee REALTORS® Form RF401, Purchase and Sale Agreement (ver. 05/05/2026), p. 3, lines 158 to 161 ("Closing Agency for Buyer & Contact Information"; "Closing Agency for Seller & Contact Information").
2. Tenn. Code Ann. § 56-35-134(a), added by 2026 Tenn. Pub. Acts ch. 769, § 1 (H.B. 569 / S.B. 394), effective July 1, 2026 ("title insurance agencies that separately represent the buyer and seller"). The Act defines neither "represent" nor "settlement agency." See § 56-35-102(9) (a "title insurance agency" issues policies under the standards "prescribed by the title insurance company that the agency represents"). The bill as introduced expressly allowed a seller to retain a licensed attorney; that language was removed by House Amendment 1 (HA0852), adopted March 30, 2026.
3. Tenn. Code Ann. § 23-3-103(a), originally enacted by 1935 Tenn. Pub. Acts ch. 30, § 2, and amended since, most recently by 2007 Tenn. Pub. Acts ch. 236, § 1 (no "association or corporation [shall] engage in the practice of the law or do law business"); § 23-3-101(1) ("law business" includes "the advising or counseling for valuable consideration of any person as to any secular law" and "the doing of any act for valuable consideration in a representative capacity, obtaining or tending to secure for any person any property or property rights whatsoever"); § 23-3-101(2) ("person" includes any corporation or other legal or commercial entity); § 23-3-103(b) (violation is a Class A misdemeanor); § 23-3-103(c)(1) (civil penalty of up to $10,000 per violation).
4. Tenn. Code Ann. § 56-35-103 authorizes a title insurance company to maintain title plants, issue abstracts and certificates of title, and act as escrow agent in property transactions. Those services are permitted even though a corporation may not practice law or do law business under § 23-3-103(a). That authority does not extend to advising a buyer or seller on the law or acting for them in a representative capacity, which remain law business under § 23-3-101(1). See also § 56-35-135(b), added by 2026 Tenn. Pub. Acts ch. 769 (on sales of one to four residential units, the settlement agency listed for the purchaser or borrower on the contract is exclusively authorized to issue the title insurance, subject to lender approval, with exceptions for first-time new construction sales and auctions).
5. Tenn. Code Ann. § 23-3-103(a) (only a person "duly licensed" may practice law or do law business). A title insurance agent may be a natural person (§ 56-35-102(10)), so a licensed attorney who works for or owns a title agency may represent a buyer or seller, but only by agreeing to do so. Because that attorney also owes duties to the title insurer, the representation requires the client's informed consent, confirmed in writing. Tenn. Sup. Ct. R. 8, RPC 1.7(b). A lawyer who controls a title company must take reasonable measures, preferably in writing, so that customers know the title services are not legal services and that the protections of the client and lawyer relationship do not apply. Tenn. Sup. Ct. R. 8, RPC 5.7(a)(2), (b); Tenn. Bd. of Prof'l Responsibility Formal Ethics Op. 2017-F-164.
6. Tenn. Code Ann. § 56-35-134.
7. Tenn. Code Ann. § 23-3-103(a).
8. Tenn. Code Ann. § 23-3-101 (definition of "law business").
9. Tenn. Code Ann. § 56-35-102 (definitions; a title insurance agent acts for a title insurer under an agency agreement).
10. Tenn. Sup. Ct. R. 8, RPC 1.13(a).
11. Tenn. Sup. Ct. R. 8, RPC 1.7(b) and RPC 1.8(f).
12. Board of Professional Responsibility, Formal Ethics Opinion 80-F-2; see also Formal Ethics Opinion 2017-F-164.
13. Tenn. Sup. Ct. R. 8, RPC 4.3.
14. Tenn. Sup. Ct. R. 8, RPC 2.2 (a lawyer may act as intermediary between clients in one matter only after consulting each client on the implications, including the effect on confidentiality and the attorney-client privilege, and obtaining each client's written consent; any client may withdraw that consent, and the lawyer must then withdraw).
15. Tenn. Sup. Ct. R. 8, RPC 1.4 (the duty to explain a matter to the extent reasonably necessary for the client to make an informed decision) and RPC 1.16 (declining or terminating representation).
16. Tenn. Code Ann. § 56-35-134 (when two title insurance agencies share premiums, commissions or fees on one closing, the parties must receive written notice and sign an acknowledgment).
17. What this means on your file: the duties we owe depend on your situation. In certain situations, a financed purchase for example, Vanderpool Law must follow the lender's written closing instructions, and for the policy the firm acts as the underwriter's agent. If any duty to anyone else applies to your file, we tell you exactly what it is in writing and you'll sign off on it, either before or at closing; see "If we ever owe a duty to anyone else," above, and notes 14 to 16.