Can a North Carolina lawyer own a title insurance agency, and how must the lawyer supervise nonlawyer title abstractors?

Plain-English summary

Lawyers, some licensed only in North Carolina and some in both Carolinas, owned a title insurance agency issuing policies on properties in both states, and used the South Carolina-licensed lawyers to provide title certification for South Carolina properties. The committee addressed, in five parts, the ownership arrangement and the lawyers' use of nonlawyer abstractors.

The opinion concluded that a North Carolina lawyer may own all or part of a title insurance agency that writes policies on North Carolina property, provided the lawyer does not give a title opinion to the title insurance company for which the agency issues policies (RPC 185). North Carolina lawyers may also own all or part of a title company writing policies in South Carolina if allowed by law, and may act as title agents for a company they own, again subject to the no-title-opinion condition. Lawyers licensed in both states who own such an agency may provide South Carolina title certifications if allowed by South Carolina law and its ethical code.

On supervision, the lawyers used independent nonlawyer abstractors to certify title outside their immediate community, vetting each abstractor's procedures, education, experience, and references before use. The committee held this was not adequate. Under RPC 216, a lawyer using a nonlawyer independent contractor to search a title must take reasonable steps to ascertain the nonlawyer is competent and, at all times the nonlawyer is assisting, must provide appropriate supervision and instruction regardless of the distance between them (Rule 5.3). The lawyer also may not issue a title opinion unless it is based on the lawyer's own independent professional judgment, competence, and personal knowledge of the relevant records, consistent with the State Bar's Guidelines for Use of Non-Lawyers in Rendering Legal Services.

Currency note

This opinion was issued in 1999, before North Carolina's adoption of the 2003 revisions to the Rules of Professional Conduct, and it cites the nonlawyer-supervision rule under the numbering then in effect (Rule 5.3), relying on RPC 185 and RPC 216 and the State Bar's 1998 Guidelines for Use of Non-Lawyers. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Can a North Carolina lawyer own a title insurance agency?

A: Yes. The opinion held a lawyer may own all or part of a title insurance agency writing policies on North Carolina property, provided the lawyer does not give a title opinion to the insurer the agency writes for (RPC 185).

Q: Can the lawyer also act as a title agent for a company the lawyer owns?

A: Yes, if allowed by law and subject to the same condition that the lawyer not give a title opinion to that insurer.

Q: Is it enough to vet a nonlawyer abstractor's credentials before using them?

A: No. The opinion held that under RPC 216 and Rule 5.3 the lawyer must also provide appropriate ongoing supervision and instruction at all times the nonlawyer is assisting, regardless of distance.

Q: Can the lawyer rely on the abstractor's work to issue a title opinion?

A: Not by itself. The opinion held the lawyer may not issue a title opinion unless it rests on the lawyer's own independent professional judgment, competence, and personal knowledge of the relevant records.

Background and rules framework

The opinion applied North Carolina Rule 5.3 (responsibilities regarding nonlawyer assistants), the analogue to Model Rule 5.3, together with the conflict concern (Rule 1.7) underlying the bar on giving a title opinion to an insurer the lawyer's agency serves. It relied on RPC 185, RPC 216, and the State Bar's Guidelines for Use of Non-Lawyers in Rendering Legal Services (July 18, 1998, #10), and noted G.S. 58-26-1(a).

Citations and references

Rules of Professional Conduct:

• MR 5.3 (responsibilities regarding nonlawyer assistants) / NC Rule 5.3
• MR 1.7 (conflicts of interest) / NC Rule 1.7

Statutes:

• N.C. Gen. Stat. 58-26-1(a) (title insurance)

Other opinions cited:

• NC RPC 185: a lawyer-owner of a title agency may not give a title opinion to the insurer the agency serves
• NC RPC 216: a lawyer must confirm a nonlawyer title searcher's competence and supervise the work regardless of distance

See also

• ABA Formal Op. 506: Responsibilities Regarding Nonlawyer Assistants
• ABA Formal Op. 08-451: Outsourcing Legal and Nonlegal Services

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/99-formal-ethics-opinion-6/

Original opinion text

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

Inquiry #1:

Certain lawyers, some licensed to practice in only North Carolina and some licensed to practice in both North and South Carolina, own and operate a title insurance agency that issues title policies for properties in both North and South Carolina. The lawyers who are licensed to practice in South Carolina provide title certification to the title agency for the purpose of writing title policies on South Carolina properties.

May a North Carolina lawyer own all or part of a title insurance agency that writes title policies on North Carolina property?

Opinion #1:

Yes, provided the lawyer does not give a title opinion to the title insurance company for which the title agency issues policies. See RPC 185.

Inquiry #2:

May North Carolina lawyers own all or part of a title insurance company that writes title policies in South Carolina?

Opinion #2:

Yes, if allowed by law.

Inquiry #3:

May North Carolina lawyers act as title insurance agents for a title insurance company owned by the same lawyers?

Opinion #3:

Yes, if allowed by law and subject to opinion #1 above.

Inquiry #4:

May lawyers licensed to practice in both North and South Carolina who own a title insurance agency that writes policies in both states provide title certifications to the agency for real estate located in South Carolina?

Opinion #4:

Yes, if allowed by law and the ethical code of South Carolina.

Inquiry #5:

The North Carolina lawyers provide title certification services for North Carolina real estate transactions. To undertake certification of title to real estate located outside of the lawyers' immediate community, the lawyers utilize independent title abstractors who are not licensed lawyers. Prior to utilizing the services of a title abstractor, the lawyers conduct an interview of each abstractor, evaluate his or her procedures and methods, determine his or her level of education and experience, and conduct a reference check to evaluate the abstractor's performance history. Is this level of supervision adequate under the Revised Rules of Professional Conduct?

Opinion #5:

No. RPC 216 requires a lawyer who is using the services of a non-lawyer independent contractor to search a title to take reasonable steps to ascertain that the non-lawyer is competent and, at all times that the non-lawyer is assisting the lawyer, to provide the non-lawyer with appropriate supervision and instruction regardless of the distance between the lawyer and non-lawyer. See Rule 5.3. The opinion also indicates that the lawyer may not issue a title opinion unless the opinion is based upon the lawyer's own independent professional judgment, competence, and personal knowledge of the relevant records and documentation. See also the Guidelines for Use of Non-Lawyers in Rendering Legal Services of the North Carolina State Bar (July 18, 1998, #10). [Note: this opinion assumes that the lawyer is not giving a title certification to the title agency owned by the lawyer. See G.S. §58-26-1(a).]