Closing Agent’s Fiduciary Duties Drastically Expanded?

This month, the Fifth District Court of Appeal rendered a decision that is sure to cause a great deal of concern amongst closing attorneys and closing agents alike. In the case of Dingle v. Dellinger, 37 Fla. L. Weekly D322 (Fla. 5th DCA, February 7, 2014), the 5th DCA essentially held that a transactional attorney owed a duty to all parties to the transaction, although the attorney only represented the seller.  In that case, the attorney was hired by the property owner (seller) to draft a quit claim deed gifting property to certain third parties. The property owner used a power of attorney to execute the deed, but the court found that the power of attorney was defective, and therefore the conveyance itself was defective (and thus ineffective to transfer the property).  The grantees in the deed sued the attorney for malpractice. The attorney argued that she did not represent them.

In a somewhat surprising decision, the court held that the grantees were “third party beneficiaries” to the attorney client contract, and that a closing attorney owes a duty to both sides of the transaction if the parties’ interests are non-adversarial (emphasis supplied). As such, the attorney was held responsible to the grantees, even though she formally represented the other party in the transaction.

While the court attempted to limit its decision to the facts of that case, its reasoning could have far reaching implications for closing agents, and parties who use closing agents. The decision essentially means that any closing agent has a duty to both the buyer and the seller to make sure that the transaction is handled properly, no matter who they represent and no matter who referred the transaction to them. While most reputable closing agents probably already understand this responsibility to some extent, there are some that do not, and many who do not understand the full extent of their responsibility.

Closing agents should understand their fiduciary duty to all parties to a transaction, now more than ever. And for those of you who have ever had a closing agent tell you “I don’t represent your client,” or “your client didn’t refer the deal to me,” or “that’s not my job,” you can feel free to remind them of the Dingle case and the fact that the courts may now disagree with them, and feel that a closing agent’s job is much more comprehensive than they might realize.

As always, if you have any questions about a closing agent’s fiduciary responsibility to the parties to any transaction, please reach out to your real estate attorney. We will keep you apprised of this decision, as it is sure to get appealed to the Supreme Court.

Sincerely,

Berlin-Patten, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com 

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