Can a lawyer give a title insurer a limited title opinion by updating (tacking onto) a prior lawyer's title search instead of doing a full search?

Plain-English summary

A lawyer (Lawyer B) representing a buyer updated an earlier lawyer's (Lawyer A's) title search rather than conducting a full search, and the title insurer was willing to issue a policy based on that update and the prior policy. The opinion addressed whether Lawyer B could ethically render a title opinion on that limited basis, whether she needed the prior lawyer's permission to tack onto his base title, and what she had to disclose to her client.

The opinion concluded a lawyer could render a limited title opinion based on a limited examination of the public records for the purpose of obtaining a title insurance policy, because the Rules did not require personal inspection of all documents in the chain of title so long as the lawyer fully disclosed to the client the precise nature and extent of the service. The client was to be advised to rely on the title insurance policy for matters of title rather than on the lawyer's limited records examination. The opinion added that, because title insurers frequently omit exceptions in mortgagees' policies that would appear in owners' policies, tacking should be limited to owners' policies.

The opinion further concluded Lawyer B did not need Lawyer A's permission to tack onto his base title, treating whether Lawyer A's continuing liability to the insurer survived as a question of law beyond the committee's purview, and suggested a lawyer might include a disclaimer that the opinion was for the current transaction only. Finally, the required disclosures about the limited search had to be made to the client before accepting employment, though they need not be in writing (citing the then-current Rule 6(b)(2)).

Currency note

This opinion was modified in part. In 2009 FEO 17, the State Bar concluded that the standard of care for tacking is outside the Ethics Committee's purview and withdrew the part of RPC 99 stating that tacking should be limited to owners' policies. This opinion was issued in 1991, before North Carolina's adoption of the 2003 revisions to the Rules of Professional Conduct, and it cites the superseded rule numbering then in effect. 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 Treat this page as historical context, not current guidance.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 rule, deadline, or requirement mentioned here.

Common questions

Q: Did a lawyer have to personally inspect every document in the chain of title before giving a title opinion?

A: No. Opinion #1 concluded the Rules did not require personal inspection of all documents so long as the lawyer fully disclosed to the client the precise nature and extent of the limited service.

Q: Did the lawyer need the prior lawyer's permission to tack onto his title search?

A: No. Opinion #2 concluded the Rules did not require obtaining the prior lawyer's permission; whether the prior lawyer's liability to the insurer continued was treated as a question of law beyond the committee's purview.

Q: When did the limited-search disclosure have to be made?

A: Opinion #3 concluded the disclosures had to be made to the client before accepting employment, and that they need not be in writing.

Background and rules framework

At the time, the opinion addressed a lawyer's duty of competent representation and disclosure when rendering a limited title opinion, applying the then-current North Carolina Rule 6(b)(2) on disclosure before accepting employment. In current numbering the subject matter corresponds to Model Rule 1.1 (competence) and Model Rule 1.4 (communication). The standard-of-care aspect of the opinion was later withdrawn by 2009 FEO 17.

Citations and references

Rules of Professional Conduct:

• N.C. Rule 6(b)(2) (then in effect): disclosure before accepting employment
• Current counterparts: Model Rule 1.1 (competence); Model Rule 1.4 (communication)

Other opinions:

• 2009 FEO 17: withdrawing the standard-of-care statement on limiting tacking to owners' policies

See also

• NC State Bar 2009 FEO 17: Tacking Title Opinions
• NC State Bar 2009 FEO 14: Spouse Title Agency

Source

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

Original opinion text

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

Editor's Note: This opinion was originally published as RPC 99 (Revised).

Inquiry #1:

In 1986, Lawyer A represented Mr. Jones in his purchase of a house and lot. A performed a full title search and obtained a title insurance policy for Jones and his lender with Title Insurance Company. In 1990, Jones contracts to sell the house and lot to Ms. Smith. Smith retains Lawyer B to represent her in the transaction. B obtains a copy of the policy Title Insurance Company issued on the property.

Lawyer B's title search for Smith consists of updating Lawyer A's search; B searches the title from 1986 to 1990. Title Insurance Company allows B to apply for title insurance based on the update, and holds A liable for any title defects during A's search period that result in a claim against Smith. A never represented Smith. A has no knowledge that A's work is serving as the basis for providing title insurance to Smith. Title company has never informed A that A's liability to title company extends beyond the time A's clients owned the property. Lawyer B has made no attempt to obtain A's permission to use A's base title.

May Lawyer B render a title opinion without having conducted a personal inspection of documents in the chain of title?

Opinion #1:

Yes. A lawyer may ethically render to a title insurance company a limited title opinion based upon a limited examination of the public records for the purpose of obtaining the issuance of a title insurance policy upon real property. The Rules of Professional Conduct do not require personal inspection of all documents in the chain of title so long as the lawyer rendering the opinion fully discloses to his or her client the precise nature of the service being rendered and the full extent thereof. The client should be advised that he or she should rely on the title insurance policy as to matters of title and not upon the attorney's examination of the public records. If the Title Insurance Company is willing to base its underwriting decision upon the fact that it or another title insurance company has previously issued a title insurance policy and Lawyer B's limited title opinion, that does not offend the Rules of Professional Conduct.

Since title insurers frequently omit exceptions in mortgagees' policies that would appear in owners' policies, tacking should be limited to tacking onto owners' policies.

Inquiry #2:

May Lawyer B tack onto Lawyer A's base title without first obtaining Lawyer A's permission?

Opinion #2:

Lawyer B may ethically apply for the issuance of a title insurance policy on the basis of her limited title opinion and the fact that a title insurance policy has previously been issued. In so doing, the Rules of Professional Conduct would not require Lawyer B to obtain Lawyer A's permission. It is a question of law as to whether or not Lawyer A's liability to the title insurance company would continue after the issuance of the new policy. It is beyond the purview of this committee to make that determination. A possible solution to this problem might be for a lawyer to include in her opinion to the title insurer a disclaimer to the effect that the opinion is submitted only with respect to the current transaction and is not to be relied upon in any future transaction.

Inquiry #3:

Must Lawyer B disclose to his or her client that B has updated the title and not performed a full title search? Must the disclosure be in writing? Must the disclosure be made before the client agrees to engage Lawyer B?

Opinion #3:

The disclosures referred to in the first opinion should be made by Lawyer B to the client prior to accepting employment. Rule 6(b)(2). The disclosures need not be in writing.