New Jersey strikes down proposal for lawyer-owned title insurance companies.
An earlier opinion had held that it was unethical for lawyers to have ownership interests or profit participations in companies providing title services to their clients. The rationale was that such an interest would created a divided loyalty, as circumstances could arise in which the interests of the client and the title company would diverge. The new effort to change that opinion arose, apparently, as a result of two recent New Jersey judicial opinions. Since the court seemed comfortable with the notion of an attorney for a buyer also serving as an agent of a title company, the proponents of the instant proposal perhaps believed that the court would now be able to see past the ethical conflict that had caused difficulty in the earlier opinion. The second development was the court's recent opinion holding that buyers and sellers of residential real estate in New Jersey could rely solely upon brokers or title companies in connection with the closing of a transaction, and that those professional service providers could provide these services without violating prohibitions on the unlicensed practice of law.