Friday, April 11, 2008

So How Many Disclosures Must a Title Agent Make in a Real Estate Transaction??

I can't totally do this topic justice here, but a must-read for real estate practitioners is in the March '08 IL Bar Journal entitled "Ethics and the Attorney/Title Agent" (password protected) by Attorney Michael J. Rooney. Essentially he runs through the various conflicts of interest that exist in the typical real estate transaction where a Seller's attorney is representing a client but also acting as an agent of a title insurance company. He also talks about a scenario where an attorney would actually be representing the title company as client.

First, he reminds us that the IL Title Insurance Act requires the lawyer acting as a title agent to complete and distribute a "Disclosure Statement Controlled Business Arrangement." OK, I do see these disclosed in most transactions.

But he talks about other disclosures that frankly I've never seen before...have you?

Essentially one disclosure discloses to the Seller what you're doing as a title agent, the cost, and their right to seek title insurance from another provider (See IL Rules of Professional Conduct 1.7(b), 1.8(a) and 2.3). The other again to your Seller is an "Adverse Client" Disclosure and Consent, essentially warning of a potential conflict of interest between a Seller and a title company (IRPC 1.7(a)).

Well, add another couple of forms to the closing pile.

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