The Florida Bar
PROFESSIONAL ETHICS OF THE FLORIDA BAR
November 26, 1969
November 26, 1969
A lawyer may not participate in the assertion of a claim against his former client, a seller of real estate, in connection with alleged warranties contained in the instruments prepared by the attorney.
Chairman MacDonald stated the opinion of the committee:
The inquiring attorney represented both buyer and seller in a not untypical sale of a residence. With the knowledge and concurrence of both parties, he prepared the contract of sale and purchase, statutory warranty deed, and mechanic's lien affidavit. On the closing statement given to the seller, a charge was made for the work of the attorney in connection with the preparation of contract, deed and lien affidavit. A similar charge was made on the buyer's closing statement for the attorney's fees in connection with title insurance and examination of the abstract.
The contract for the sale of the real estate, executed prior to the consummation of the sale, was in the form approved by the local Bar association. It contained the following language:
Within 3 days from the date of this contract, the seller shall deliver to the buyer or his attorney an acceptable abstract showing marketable title in the seller. The buyer's attorney shall have not less than 10 days but not more than 20 days from the date of delivery to examine said abstract. If the title is unmarketable, the buyer or his attorney shall so notify the seller or his attorney or agent in writing specifying the defects and the seller shall have 120 days from the receipt of such notice to cure said defects. If the title is marketable, or is perfected, this transaction shall be closed within 3 days after elapse of said time limited for examination or perfection of title.
It appears that the initial continuation of the abstract was ordered by the attorney on request of the seller, and the resulting charge of the abstracter was borne by the seller as a charge against him on the closing statement. A continuation at the time of the closing was ordered for the benefit of the buyer and was charged to the buyer on his closing statement. The inquirer apparently examined the abstracts, but instead of issuing an opinion of title, issued a Lawyers' Title Guaranty Fund policy, the cost of this policy being borne by the buyer.
Subsequent to the consummation of the transaction it developed that there was a pre-existing municipal improvement lien against the subject property which was not reflected by the abstract or the continuations thereof. The existence of such lien was therefore not excluded from the coverage of the Lawyers' Title Guarantee Fund certificate.
Upon discovery of the existence of this lien, the buyer, with the cooperation and assistance of the inquirer, made a claim against the abstract company. The abstract company satisfied the lien, but took an assignment of the buyer's purported claim against the seller for breach of warranty. The inquirer advises that he has now been retained by the abstract company to represent it in its claim against the seller under the assignment. He inquires as to whether he may properly proceed with this representation.
At the outset we take note of the serious questions lurking in the background of this inquiry, i.e., how it is possible for the abstracter to proceed against its own customer who purchased the abstract from it, and on what reasoning the buyer, assisted by the attorney who had represented both parties, went against the abstract company instead of against the Lawyers' Title Guaranty Fund which had issued the insurance policy in question, it appearing to us that the seller in effect complied with the marketable title provisions of the contract of sale by providing an abstract on which title insurance protecting the buyer was procured. We take note of the fact that the inquirer thus facilitated the avoidance of a claim against the Fund which would have affected his experience rating with the Fund.
These questions are ones of law and doubtless in the final analysis beyond the jurisdiction of this committee. However, the answers are so manifest from the facts given that it is difficult to envision how the parties can find themselves arrayed in the present posture, wherein the errant abstracter seeks to make a victim of the innocent seller who had relied on the attorney and on the abstract to satisfy his contractual obligations.
In all events, it is our unanimous view that it is entirely inappropriate and a manifest violation of Canon 6 for the inquirer to participate in any manner whatever in the assertion of a claim against his former client, the seller, in connection with any alleged violation of the warranties contained in the instruments prepared on behalf of both parties by the inquirer. We moreover think it appropriate to point out that it was entirely inappropriate for the inquirer to in effect choose a side and to select a source of compensation to the buyer least likely to prove injurious to himself.