Can a lawyer render a title opinion by tacking to a mortgagee's title policy, and is that an ethics question?

Plain-English summary

The inquiry asks whether a lawyer may render a title opinion to a title insurer by "tacking" to a mortgagee's (lender's) title insurance policy. RPC 99 had said that a lawyer need not personally inspect every document in the chain of title if the lawyer fully discloses the nature and extent of the service, and added that because title insurers often omit exceptions in mortgagees' policies that appear in owners' policies, tacking should be limited to owners' policies.

The opinion concludes the appropriate standard of care for rendering a title opinion is outside the Ethics Committee's purview, and to the extent RPC 99 appeared to opine on the standard of care for tacking to an owner's versus a mortgagee's policy, that part of RPC 99 is withdrawn. The opinion reframes the question as an ethics matter of competence and communication: whether tacking to an owner's or a mortgagee's policy, the lawyer's duty is to provide competent representation under Rule 1.1 and to reasonably consult with the client about the means used under Rule 1.4(a)(2). The lawyer must consult with the client before using a method of rendering a title opinion that might present additional risk for the client.

In practice

Under this opinion, as the North Carolina rules stood at the time, the choice of which policy to tack to is treated as a standard-of-care question the Ethics Committee does not resolve, rather than a per se ethics prohibition. What the rules require is competent representation and advance consultation with the client about a method that could carry additional risk, leaving the substantive title-practice judgment to the applicable standard of care.

Common questions

Q: Is tacking a title opinion to a mortgagee's policy prohibited by the ethics rules?

A: The opinion concludes the standard of care for tacking is outside the Ethics Committee's purview and withdraws the portion of RPC 99 that had addressed it, so it does not impose an ethics prohibition on tacking to a mortgagee's policy.

Q: What does the lawyer have to do before using such a method?

A: The opinion concludes the lawyer must provide competent representation under Rule 1.1 and, under Rule 1.4(a)(2), reasonably consult with the client, including before using a method of rendering a title opinion that might present additional risk for the client.

Background and rules framework

The opinion interprets Rule 1.1 of the North Carolina Rules of Professional Conduct (competence, the counterpart to Model Rule 1.1) and Rule 1.4(a)(2) (communication about the means of representation, the counterpart to Model Rule 1.4). It revisits and partially withdraws prior opinion RPC 99 on title-examination practice, drawing the line between ethics duties and the substantive standard of care.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.1 (competence); N.C. Rule 1.1
• Model Rule 1.4 (communication); N.C. Rule 1.4(a)(2)

Other opinions cited:

• RPC 99 (partially withdrawn): title examination and tacking

See also

• NC State Bar 2009 FEO 4: Credit Card Trust Acct
• ABA Formal Op. 08-451: Outsourcing Legal Work

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2009-formal-ethics-opinion-17/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

RPC 99 holds that the Rules of Professional Conduct do not require personal inspection of all documents in the chain of title so long as a lawyer rendering an opinion on title for real property fully discloses to the client the precise nature and extent of the service being rendered. The opinion further states, "Since title insurers frequently omit exceptions in mortgagees' policies that would appear in owners' policies, tacking should be limited to tacking onto owners' policies."

May a lawyer render a title opinion to a title insurance company by tacking to a mortgagee's (lender's) title insurance policy?

Opinion:

This issue of the appropriate standard of care for rendering a title opinion is outside the purview of the Ethics Committee. To the extent that RPC 99 appeared to opine on the standard of care relative to tacking to an owner's policy versus a mortgagee's (lender's) policy for the purpose of rendering a title opinion, that part of the opinion is withdrawn.

Whether tacking to an owner's policy or a mortgagee's policy, a lawyer's duty is to provide competent representation to his client, consistent with Rule 1.1, and to reasonably consult with the client about the means used to accomplish the client's objectives. Rule 1.4(a)(2). The lawyer must consult with the client before using a method of rendering a title opinion that might present additional risk for the client