Closing Documents Key To Summary Judgment

A key defense to “malpractice” claims against closing attorneys by non-lenders is the lack of an attorney-client relationship.  In cases where there is a lender, the closing attorney is almost always representing the lender at the closing.  Despite this common relationship, Georgia’s appellate courts have permitted a number of claims against closing attorneys by non-clients.  See, e.g., Kirby v. Chester, 174 Ga. App. 881, 331 S.E.2d 915 (1985)(applying third-party beneficiary theory); Simmerson v. Blanks, 149 Ga. App. 478, 254 S.E.2d 716 (1979)(applying voluntary agency theory).

If you find any document that does not favor the lender, let me know so I can fix it.

Closing attorneys have learned from these cases, however.  Most closing attorneys now include in their forms language indicating that the attorney represents only the lender and not the buyer, seller, or any other person or entity at the closing table.  Where proper documentation is included in the closing documents, the attorney can get summary judgment on the issue of lack of privity.  See, e.g., Williams v. Fortson, Bentley & Griffin, 212 Ga. App. 222, 441 S.E.2d 686 (1994) (“The representation disclaimer precluded an actionable reliance [by the buyer] on any promise by [the attorney].”); Carmichael v. Barham, Bennett, Miller & Stone, 187 Ga. App. 494, 370 S.E.2d 639 (1988)

A recent case from the Court of Appeals shows that evidence about confusion over who the attorney represented at a real estate closing continues to create exposure issues for attorneys.  In Jenkins v. Pierce (A10A0091, Ga. App., decided June 25, 2010), the Court of Appeals reversed summary judgment for an attorney granted by the trial court.  The plaintiff claimed she was told that she thought her family was taking her to an attorney to execute a will.  On the day in question, however, she signed loan documents, a quit claim deed giving an interest in her land to her relatives, and a living will. 

The Court found that because a question of fact existed about the existence of the attorney-client relationship, the plaintiff was excused from the general rule that a party to a contract who can read, must read, or show a legal excuse for not reading.  Instead, the Court held that where a party has a confidential relationship with another party, and fails to read the documents in reliance of that relationship, the duty to read is relaxed.  Citing McWhorter Ltd. v. Irvin, 154 Ga. App. 89, 91, 267 S.E.2d 630 (1980).  The documents identified in the opinion are limited to a will, a codicil, a security deed, a quit claim deed, and a check.  There was no mention of a representation disclaimer document explaining who the attorney was representing in the closing.

Although there is much more to this case than the typical ignorance over who the attorney represents at a typical real estate closing, it is a reminder that at any closing, the attorney should include a representation disclaimer to be signed by all present explaining who the attorney is representing.

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