The role of the attorney is to secure for the attorney’s client a title which is in fact market¬able, subject to the terms of the client’s contract specifying permitted encumbrances, if any. An attorney must (i) examine the land records to determine marketable record title; (ii) take into consideration other matters outside the land records which may affect the market¬ability of title; and (iii) disclose and report to the client those matters affecting marketability of title which would lead a reason¬ably prudent buyer to refuse to take a conveyance of the property, when paying full value for it.
An attorney has an obligation to identify those factual circumstances which constitute clouds on the title that are disclosed in the public records and report those matters to the recipient of the results of the search. An attorney has a duty to inform and explain to the client the implications of any clouds on title that would influence a reasonably prudent purchaser not to purchase the property. Fleming v. Nicholson, 168 Vt. 495 (1998) citing North Bay Council, Inc., v. Bruckner, 563, A.2d. 428, 431 (N.H. 1989).
Comment 1. See Standard 1.3 for a definition of marketable title.
Comment 2. A contract for the sale of real estate includes an implied condition that, except for the encumbrances referred to therein, marketable title is to be transferred unencumbered with any defects.
Comment 3. The role of the attorney in a real estate transaction is broader than the role of the title examiner. The determination of marketable title is one element among several. The attorney’s obligation is to counsel the client on all elements of the transaction, subject to the terms of the attorney’s engagement. Refer to Ethical Consideration 7-8 of the Code of Professional Responsibility.
Comment 4. An attorney must consider information outside the land records that comes to the attorney’s attention during the course of representing the attorney’s client.
Comment 5. The attorney must disclose to the attorney’s client information which may affect marketability of the title of which the attorney has actual knowledge or which is properly filed and indexed in the land records. The disclosure should be made in a manner such that it is understand¬able to the client and in reasonable detail to permit the client to make an informed decision regarding title to the property.
September 9, 2016 – Added second paragraph to Standard.