Chicago Title Suit Warns Lawyers About Relying on Title Reports

An unusual lawsuit filed against a veteran New Jersey real estate attorney by a major title insurance company has caused fellow practitioners to sit up and take notice.

Although the suit was dismissed and it appears that the defendant attorney, Albert Birchwale, did nothing wrong, the Chicago Title Insurance Co. malpractice claim points to a possible pitfall for unwary practitioners in unrelated transactions, reports the New Jersey Law Journal.

Relying on a clean bill of health for a Cliffside Park six-unit apartment building from both a current and former title report, Birchwale helped a client close on the purchase of the building. However, unbeknownst to everyone involved in the transaction, a previous seller had failed to pay estate tax on the building, the legal publication recounts.

Chicago Title contended in the now-dismissed suit that Birchwale should have noted in the title report that a prior sale within the past 10 years was an estate and looked for definitive documentation from the Internal Revenue Service that estate tax had been paid by the previous seller.

Such IRS documentation reportedly did not exist in this case: The previous seller, who has been accused of fraud, allegedly certified himself that no estate tax was due on the property.