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
See also LE Op. 1329.