If a title agent acts as a closing agent and misidentifies the buyer on closing documents, can the title agent be liable to the buyer?
Yes. “It is well-established that a title insurance company acting as a closing agent has the duty to supervise a closing in a ‘reasonably prudent manner.’” Askew v. Allstate Title & Abstract Co., 603 So.2d 29, 31 (Fla. 2d DCA 1992), quoting Florida Southern Abstract & Title Co. v. Bjellos, 346 So. 2d 635 (Fla. 2d DCA 1977). See also Sommers v. Smith & Berman, P.A., 637 So. 2d 60 (Fla. 4th DCA 1994). “Consequently, the title insurance company has a duty to prepare the closing documents in accordance with the contact for sale.” Askew, 603 So. 2d at 31. If the title agent, acting as the closing agent, fails to prepare the closing documents consistent with the terms of the sales contract, a cause of action for negligence in preparing the documents will exist. Id.
Numerous Florida cases also find that a title agent will be liable under a negligence theory for failing to identify the nature of the documents that the buyer is signing at the closing. See Charles v. Florida Foreclosure Placement Center, LLC, 988 So.2d 1157, 1160 (Fla. 3d DCA 2008)(stating that the title insurance agency, acting as the closing agent, “had a duty to act in a reasonably prudent manner by at least identifying what Charles was signing, specifically that one of the documents she signed was a closing statement for the sale of her property and that another was a deed to her property”); Daniel v. Coastal Bonded Title Co., 539 So. 2d 567 (Fla. 5th DCA 1989)(finding that negligent breach of fiduciary duty cause of action against title agent was improperly dismissed when title agent allegedly failed to disclose the existence of encroachments and easements at the time of the closing); Sudberry v. Lowke, 403 So. 2d 1117 (Fla. 5th DCA 1981)(reversing dismissal of negligence claim because title company acting as closing agent “had an obligation to disclose to its principal [the buyer] all material facts relevant to the agency,” referring to its failure to notify the buyer of a change in the mortgage interest rate); Florida Southern Abstract & Title Co. v. Bjellos, 346 So. 2d 635 (Fla. 2d DCA 1977)(finding that the title agent, as the closing agent, “breached a legal duty” to the buyers when it failed to review and point out at the closing that the termite report, which was a condition to closing, was not a negative report).
It should be noted that the title agency could argue that the economic loss rule precludes a claim for negligence against a title agent, as the claim is truly one arising in contract. There are older cases that discuss the viability of a negligence claim in this context under the economic loss rule. In the last three years, however, the Florida Supreme Court receded from all prior case law expanding the economic loss rule and limited its application to the product liability context only. See Tiara Condo. Ass’n Inc. v. March & McLennan Cos., 110 So. 3d 399, 407 (Fla. 2013). As a result, any older cases drawing this distinction are no longer good law and any argument that a negligence claim cannot stand against the title agent is no longer viable.