Legal Malpractice: Special Considerations for Real Estate Attorneys

The following excerpt is from an article written by James M. Tyrone (and Michael W. Ulmer) titled Legal Malpractice in Mississippi: Causes of Action and Defense.

Though the scope of representation may be limited by contract, closing attorneys generally have a duty to present appropriate documents to the parties at closing and ensure proper recording of deeds and security interests.[1] The Southern District of Mississippi has noted that “real estate closings present a particularly thorny dilemma for the bar” because “several parties might reasonably rely on the closing attorney’s work.”[2] Accordingly, the closing attorney must be “particularly vigilant in delineating whom the attorney represents . . . ‘and should make sure that all parties involved in the transaction understand who is and is not the attorney’s client, and give unrepresented parties an opportunity to obtain counsel.’”[3] Similarly, an attorney who serves “merely [as] a scrivener” in closing a transaction must avoid providing legal advice to any party in a transaction.[4]

Century 21 Deep South Prop. v. Corson,[5] is a watershed case that extends title attorneys’ obligations to subsequent purchasers of the property. In Corson, an attorney conducted a title opinion for the Meiers family before they purchased a house. When the Meiers sold the house to the Corsons, Century 21 only required an “update” title opinion (i.e., a search for liens created after Meiers’ purchase). When Corson sought a second mortgage, the bank required a full title opinion which revealed two liens that were not found or disclosed by the Meiers’ closing attorney. The Corsons sued Meiers’ attorney. It was undisputed that the Corsons had no attorney-client relationship with Meiers’ attorney.

Nevertheless, in the title attorney context, the Mississippi Supreme Court abolished the “requirement of [proving an] attorney-client relationship and extend[ed] liability to foreseeable third parties who detrimentally rel[ied]” on the title attorney’s work.[6] Accordingly, attorneys performing title work may potentially be liable for negligence to subsequent purchasers to whom the attorney never had any connection.

The rule of Corson must be contrasted with the outcome of Grandquest v. Estate of McFarland.[7] In Grandquest, a seller’s attorney was instructed by his client to draft a deed conveying the property to the buyer and to prepare an “Authority to Cancel Deed of Trust” to terminate the seller’s mortgage. He did so and noted on the deed that the “TITLE TO SAID LAND NOT EXAMINED.” The buyer filed suit against the lawyer alleging “malpractice in failing to advise her of the lien on the property.”[8]

Ultimately, and without addressing Corson, the Court of Appeals affirmed summary judgment for the attorney, stating, “we find nothing to suggest that the services at issue concerned anything but the mere preparation of a deed; there is no evidence that legal advice was sought from or offered by [the attorney].”[9] The court’s rationale was that the “‘legal services’ at issue were of limited scope – the preparation of a deed,” and that the lawyer “cannot be found to have committed malpractice for failing to advise where no advice was contemplated by the representation.”[10] Therefore, where an attorney is not engaged to conduct a title opinion, but rather acts merely as a scrivener preparing a deed, a purchaser may not be able to rely on the rule of Century 21 v. Corson to bring suit against an attorney.

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You can download a copy of the article here.

[1] Neal v. 21st Mortgage Corp, 601 F. Supp. 2d 828 (S.D. Miss. 2009).
[2] Marsh v. Wallace, 666 F. Supp. 2d 651, 674 (S.D. Miss. 2009).
[3] Id. (quoting Miss. Bar Ethics Op. No. 248 (2001)).
[4] Id.
[5] 612 So. 2d 359 (Miss. 1992)
[6] Id. at 374.
[7] 18 So. 3d 324 (Miss. Ct. App. 2009).
[8] Id. at 326.
[9] Id. at 328.
[10] Id. at 327-28.