Last year, I wrote a blog about The North Jersey Practice.  It was about an appellate case that held that an underwriter was responsible for an attorney's theft of funds - even though the attorney sole his client's money before the title company got involved. I wrote at the time, "I would expect a reversal on appeal."  And I was right...

Undeterred by the several states that have banned the use of private transfer fees, Freehold is apparently still trying to find a way to securitize them.  The Wall Street Journal has reported that Freehold has approached several Wall Street banks to develop the securities, but has not yet struck a deal.

I recently read an article on HeraldNet entitled Real Estate Attorneys Worth the Expense.  As a real estate attorney, I naturally like to read things like that.  Having been in the title business for many years before going to law school, I am left with the impression that nobody believes they need an attorney in a real estate transaction.  Though the article makes a good point... something really caught my attention and made my jaw drop.

There are certainly variations in custom from state to state, and even county to county.  In some locations, the seller is required to furnish an owner's policy to the buyer, in others the buyer pays for it if owner's coverage is desired.  I have always wondered about this difference and I thought it would be worth taking a closer look to see which makes more sense.  Add a comment and let us know what the custom is in your area and what you think about it.

In an industry dominated by short searches it seems rather odd to see an underwriter sue an agent for professional negligence for only searching 40 years, rather than 60.  But that is exactly what is happening in Putnam County, West Virginia.  When an attorney, acting as an agent for First American, missed a corrective deed filed in 1958, First American paid the claim and filed suit against him.

When the buyers hire their attorney to represent them in a real estate purchase and he absconds with their money, who is liable for the loss?  According to the Appellate Division of the Superior Court of New Jersey, the title company is on the hook.  The Court refers to this as an illustration of the "north Jersey practice."  Perhaps it's time for title insurers in north Jersey to rethink their closing procedures. 

Chicago Title, one of the Fidelity companies, recently filed a lawsuit against an attorney in New Jersey claiming that it was malpractice for him to rely on a title commitment he ordered for his client in the course of representing him in a purchase transaction.  I guess nothing in this industry should surprise me anymore, but I had to read this article twice just to make sure I wasn't missing something.  What does it say for the title industry when the nation's largest underwriter, controlling about 45% of the market share, sues an attorney who ordered its product for relying on its accuracy?

In Ohio, documents used require both an acknowledgment by a notary and two witnesses.  There were a lot of cases where the witnesses weren't actually present when the documents were executed.  Often times, a notary signing agent would go to the borrowers' homes and the documents were returned to the office where someone there would add the witnesses signatures.  It didn't take long for the bankruptcy trustees to catch on and they were able to set aside mortgages that were not properly executed.

In response, the Ohio legislature changed the law - now, only the notary is required, no witnesses are needed.  This was probably the result of real estate, mortgage and title industry lobbying efforts.  But, I wonder now if even this lax standard is being properly followed.  I came across a document that set off warning bells.

The title industry is rapidly changing and there are two distinct movements afoot: one dominated by the underwriters and the other is attorney controlled.  There is no shortage of critics on either side of the battle, however, most seem to prefer neither.  That is not realistic - one side will win in the end and the many small independent agents and abstractors are going to get squeezed out of the industry.  It may be time to step up and realize that changes are coming and get behind one or the other... so choose your poison carefully.

Recently I wrote about the proposed guidelines in South Carolina delineating certain real estate closing functions as the practice of law.  (see Only An Attorney).  There were several letters submitted during the comment period and there were some excellent points raised.  In my opinion, the proposed guidelines were a bit excessive in their defining of the practice of law, but it is nice to see that they are addressing the issue to ensure that everyone knows where the line is drawn in South Carolina.