ATG® MEMBERS MUST PROVIDE DISCLOSURE TO CUSTOMERS AND CLIENTS

The Disclosure Statement (Controlled Business Arrangement) form (ATG Form 3017-A) discloses that the member/agent has a financial interest in ATG and makes an estimate of the fees and charges that will be made in connection with the title and/or escrow services. ATG members and regional agents must complete this form and include it with every commitment they issue. There are two sources of law governing conflicts of interest.

1. Illinois Rules of Professional Conduct - Illinois RPC No. 1.7 is the general rule on conflict of interest and RPC No. 1.8 addresses conflicts of interest in specific prohibited transactions. The Illinois State Bar Association (ISBA) Opinion No. 227, which is the same as ABA Formal Opinion No. 304, issued October 25, 1963, recognized the ethical propriety of bar-related title insurance companies. In ISBA Opinion No. 84-1, July 1983, the ISBA stated that an ATG member's disclosure of his or her interest in ATG to the seller, when the seller is the ATG member's legal client, is sufficient to satisfy the requirements of the conflict of interest rule of the then existing Code of Professional Responsibility.

In ISBA Opinion No. 93-1, the ISBA addressed title companies' attorney agent programs, similar to the Title Services programs ATG offers, and found that they do not violate any of the RPC by their nature, although attorneys participating in them must avoid conflicts of interest under RPC No. 1.7 and 1.8, charge reasonable fees, pursuant to RPC No. 1.5, and observe the restrictions on solicitation posed by RPC No. 7.3. Further, member attorneys must comply with state and federal laws controlling title agent conduct, such as the Real Estate Settlement Procedures Act, 12 USC § 2601, et seq., and the Title Insurance Act, 215 ILCS 155/1 et seq., and failure to do so could violate RPC No. 8.4.

2. Title Insurance Act - Under Section 18 of the Title Insurance Act, 215 ILCS 155/18, a title insurance agent with a financial interest in writing title commitments and policies must disclose to the party or parties purchasing the title insurance the title agent's financial interest in the title insurance company and an estimate of the title charges. In most cases, this requires disclosure to both the buyer and seller because the buyer usually pays for the lender's title insurance policy and the seller usually pays for the buyer's title insurance policy. Because all members have a financial interest in writing title commitments and policies, all members must make this disclosure on all transactions. For more information, consult the July-August 2006 issue of the ATG concept.

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