We seem to keep seeing the same repeated complaints of non-payment for abstracting services, and former clients disappearing into the sunset.  So much of it could be avoided if the abstractors would take the time to gather some information from a client, and insist that it be printed on a search order.

We have already discussed the liability of the agent acting for an undisclosed principal in earlier posts. However, even more avenues of redress for non-payment are open to the abstractor in situations in which the client is acting as an agent for a disclosed principal.
 
Agents properly acting within the capacity of their agency can bind their clients to contract with you for abstracting services. In many cases it is simply a matter of knowing the identity of that party. As far as signing agents are concerned...they have that information available to them when they receive a copy of the HUD 1 form in the document package. The abstractors are less fortunate , and are reliant on the information in the search order.

We have discussed the wisdom of having both your fee and the date of payment for your services printed on the search order. It is also a good idea to request that the identity of the title company and lender who will ultimately benefit from your services be printed on the search order.

In a situation in which you are dealing with a client that requests a search for his client...you are most likely dealing with an agency relationship. If your client is not acting as an agent or if he is acting as an agent for an undisclosed principal...he is liable to you. If he has fully disclosed the identity of his principal, and has not transgressed the scope of his agency...his client (principal) is liable to you. That may be a lender or title company.

When I have been confronted with this situation...I normally sue both the agent and the principal on alternate theories of liability. One count of the complaint is directed at the agent. The second count of the complaint is directed at his client (principal). Seems to work every time. Most often one or the other will want to settle the matter in short order.

I know that many of the abstractors do not have the tenacity to follow through on a suit, and simply give up on an unpaid bill. However, you should know that the majority of these cases never go to trial, and wind up settling.

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