LEO: Real Estate Practice: Including Title  LE Op. 1220

 

Real Estate Practice: Including Title Examination Fees in Title

Insurance Premium Fees.

 

April 3, 1989

 

You advised that some attorneys on their real estate closing statements

are showing an attorney's fee of a certain amount and a title insurance

premium fee of a certain amount. However, the title insurance premium fee

is greater than the fee quoted by the title insurance company for the

policy and you believe that legal fees for the title examination costs are

being included in the sum listed as title insurance premium. You wish to

know whether or not this practice is unethical.

 

The committee opines that DR:2-105(A), DR:1-102(A)(4), and DR:9-101(B)(

3) are appropriate and controlling disciplinary rules in this situation.

Disciplinary Rule 2-105(A) provides that, "A lawyer's fees shall be

reasonable and adequately explained to the client." Disciplinary Rule 9-

102(B)(3) [ DR:9-102] provides that a lawyer shall maintain complete

records of all funds, securities and other properties of a client coming

into possession of the lawyer and render appropriate accounts to his

client regarding them. The Committee opines that if the closing statement

is not accurately reflecting the charges made to a client then these

disciplinary rules would be violated by the practice you have outlined.

 

The Committee is further persuaded that Ethical Consideration 2-21 [ EC:

2-21] should be the guiding principle in such a situation:

 

As soon as feasible after a lawyer has been employed it is desirable that

he reach a clear agreement with his client as to the basis of fee charges

to be made. Such a course will not only prevent later misunderstanding but

will also work for good relations between the lawyer and the client. It is

usually beneficial to reduce to writing the understanding of the parties

regarding the fee, particularly when it is contingent. A lawyer should be

mindful that many persons who desire to employ him may have had little or

no experience with fee charges of lawyers and for this reason he should

explain fully to such persons the reasons for the particular fee

arrangement he proposes.

 

To the extent an attorney is masking an attorney's fee under the guise

title insurance premium the Committee opines that this is a deceptive and

misleading practice which should be discouraged since under some

circumstances it may arise to the level of a violation of DR:1-102(A)(4).

 

Committee Opinion April 3, 1989

 

CROSS REFERENCES

 

See also LE Op. 1329.