The Florida Bar
OPINION 75-27It does not constitute solicitation for an attorney to request that a title insurance company permit him or her to examine its work product for a fee in order to give his or her client additional assurance as to the marketability of the title.
February 26, 1976
February 26, 1976
CPR: DR 2-106, EC 2-21
Committeeman Wigginton stated the opinion of the committee:
A member of a law firm in a metropolitan area submits an inquiry regarding attorneys who order title insurance for their clients, examine titles and receive fees from title insurance companies for such services. He describes the practice in his community as follows:
1. Orders for title insurance usually originate with attorneys or with mortgage bankers or brokers or real estate brokers. Bankers or brokers placing orders for title insurance frequently request that a particular attorney or law firm examine the title; attorneys or law firms ordering title insurance frequently request that they be allowed to examine the title. The title companies comply with these requests if the particular attorneys or law firms are on [their] list of approved attorneys. Some attorneys in the area qualify, but others do not.
For purposes of this inquiry, we assume that the title company has approved a request to allow a particular attorney or law firm to examine the title.
2. The title company determines the date which it believes is appropriate for assuming the validity of the base title, frequently the date as of which that company previously insured the title. It then obtains copies of every instrument of record in the clerk's office after that date and also obtains information about taxes, special assessments and any judgments of record against any of the parties whose names appear in the chain of title.
Then a title examiner employed by the title company, a nonprofessional, prepares a title search sheet, an examination sheet, and a form of title commitment.
3. The title company delivers to the examining attorney the title search sheet, the examination sheet, the form of title commitment and photocopies of the documents listed in the title search and examination sheets. The attorney assumes the validity of the title as of the date determined by the title company, and examines the photocopies of the instruments furnished to him to determine whether the state of the title is as shown on the documents prepared by the nonprofessional title examiner.
If the attorney determines from his examination that the title commitment was properly prepared he signs an opinion to that effect. If he determines that the title is not as indicated in the title commitment, he returns the documents to the title company for correction. (Although the inquiry does not expressly say so, we assume that the examining attorney's determination controls.)
4. The examining attorney is ultimately responsible for proper examination of the documents furnished to him, including any damages the title company may suffer on account of his negligence.
5. The title company pays the examining attorney, as a fee for his services, a percentage of the gross amount it charges for the title insurance. The examining attorney discloses to his client that he is examining the title for the title insurance company and that the company will pay him a fee for those services.
The attorney asks about the propriety of this practice and calls our attention particularly to Opinion 74-50.
In Opinion 74-50, we disapproved a practice similar in some ways to that in the present inquiry. In Opinion 74-50, the attorney did not disclose to his client the fact that he was receiving a fee from the title company, and the "fee" had no necessary relationship to the services performed and might be little more than a kickback and in violation of DR 2-106.
In the present inquiry, there is disclosure. EC 2-21. The Real Estate Settlement Procedures Act of 1974 requires it.
The inquiry does not indicate how much time the examining attorney will spend on any given title examination. Doubtless, the amount of time will vary. However, by endorsing the title company's commitment, the attorney becomes jointly liable for the status of the title as set forth in the title company's search, and is therefore entitled to a fee for such guaranty on his part. It must be assumed that the breakdown of the fee in relation to the premium for the title policy would be equitably agreed upon by the attorney and title company and disclosed to the client.
For the attorney to request that the title insurance company permit him to examine the title company's work product in order to give his client additional assurance as to the marketability of the title does not constitute solicitation, but extends the client's confidence and continues the attorney's responsibility.
The Committee would affirm the propriety of the practice as outlined and conditioned and would modify its Opinion 74-50 insofar as it may be inconsistent with this Opinion.