Reasons real estate attorneys may face malpractice litigation

Like many other types of professionals, attorneys in California usually carry some type of malpractice insurance to cover their liability if they are found negligent in a legal malpractice lawsuit. Legal malpractice insurance companies keep track of the types of claims that are filed most often. According to the Insurance Journal, in recent years, real estate is one of the top four practice areas generating malpractice claims.

The Hanover Insurance Group cites the American Bar Association’s data regarding the top claims against real estate attorneys.

Failure to accurately describe the property

If the attorney makes a mistake when preparing the deed, the resulting inaccuracy on the title could cause any number of problems for the owner in the future.

Conflict of interest

An attorney may attend the closing in order to assist a client and ensure that his or her interests are represented. However, if the attorney answers questions for the other party during the process, that legal counsel may create an attorney-client relationship, resulting in a conflict of interest.

Cash back at closing fraud

If the buyer and seller agree to inflate the price of the house so that they receive more from the lender than the actual selling price, it is fraud.

Vague lease

An attorney must ensure that a form lease agreement is written in terms that protect the client’s interest.

Attorney as escrow agent

When an attorney holds escrow funds for a client, this puts him or her in the role of a fiduciary. If the funds are released in any way other than according to the escrow instructions, it could be malpractice, even if the attorney does not directly benefit.