When Do Title Cos. Owe A Duty Of Care To Third Parties?

Law360, New York (September 10, 2015, 10:45 AM EDT) -- In Centurion Properties III LLC v. Chicago Title Insurance Co., 793 F.3d 1087 (9th Cir. 2015), the Ninth Circuit recently confronted the question of whether title companies owe a general duty of care to third parties when they record documents. Title companies often record legal instruments at the request of their clients, and in so doing, assume a fiduciary duty to the requesting party.[1] Traditionally, the duty ran exclusively to the client and was defined by the contractual relationship between the parties.[2] Courts have been reluctant to hold title companies responsible to anyone other than the contracting parties, because expanding the duties owed by title companies could render them liable to an unknown class of persons of unknown magnitude for acts outside of the title companies' control.[3] Indeed, as the district court noted in Centurion, "Plaintiffs argue for a duty that would be potentially applicable as against the whole world, not just applicable to those persons party to, or possessing interests attendant to, a preliminary title commitment."[4] Thus, title companies generally have been immune from liability unless the injured party was in privity of contract with the title company. The ruling in Centurion could change all that....

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