Link to original WordPerfect Document
89 N.J.L.J. 696
October 27, 1966
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 100
Real Estate Transactions
We have been asked if an attorney can ethically represent both
parties in the following transactions:
A. An attorney represents the seller of real
estate. The purchaser or his agent requests
the same attorney to represent the purchaser
also in the same matter.
B. An attorney represents the purchaser of real
estate. The seller or his agent requests the
attorney to represent the seller also in the
same matter.
C. An attorney represents the seller of real
estate. Can he represent the mortgagee making
the mortgage loan to the purchaser
(representing part of the purchase price of
the real estate)?
D. An attorney represents the purchaser of real
estate. Can he represent the mortgagee making
the mortgage loan to the purchaser
(representing part of the purchase price of
the real estate)?
E. An attorney represents the builder of real
estate. Can he represent the mortgagee making
the mortgage loan to the purchaser
(representing part of the purchase price of
the real estate)?
F. An attorney represents a purchaser of real
estate. He draws a contract for the sale of
the real estate on behalf of the purchaser.
Thereupon, the sellers (or the broker
representing the sellers) requests this office
to draw a deed and affidavit of title in
connection with said sale. May we draw this
deed and affidavit of title for the sellers
without representing them and without charge
to them?
All of the foregoing questions have been previously answered
in the affirmative providing express consent to the dual
representation is given by all parties concerned after full
disclosure of the facts. See In re Ramp, 40 N.J. 588 (1963), and
N.J. Advisory Committee on Professional Ethics, Opinion 51, 87
N.J.L.J. 705 (1964).
The guidelines in such transactions have been clearly plotted
but the posing of these questions seems to indicate that the
clarity discerned by us, is not shared by some members of the bar.
It might be well, therefore, to reiterate what we thought was free
of doubt.
The dual representation, obvious in each of the questions,
presents a conflict of interest proscribed by the Canons of
Professional Ethics, Canon 6, in these words, "It is unprofessional
to represent conflicting interests .... ." This conflict was
expressed in In re Kamp, supra, as follows:
A conflict of interest is inherent in the
relationship of buyer and seller; and Canon 6
is applicable to every occasion in which an
attorney undertakes to represent both the
seller and the buyer under a sales contract.
And a conflict is also present if an attorney undertakes to
represent a seller and mortgagee, a purchaser and mortgagee, or a
builder and mortgagee. The exception that permits an attorney to
represent both parties, in the business relations here under
discussion, is the "express consent of all concerned given after a
full disclosure of the facts" exacted by Canon 6. In this
connection, Justice Proctor said in the case of In re Kamp, supra:
...Full disclosure requires the attorney not
only to inform the prospective client of the
attorney's relationship to the seller, but
also to explain in detail the pitfalls that
may arise in the course of the transaction
which would make it desirable that the buyer
have independent counsel. The full
significance of the representation of
conflicting interests should be disclosed to
the client so that he may make an intelligent
decision before giving his consent. If the
attorney cannot properly represent the buyer
in all aspects of the transaction because of
his relationship to the seller, full
disclosure requires that he inform the buyer
of the limited scope of his intended
representation of the buyer's interests and
point out the advantages of the buyer's
retaining independent counsel. A similar
situation may occur, for example, when the
buyer of real estate utilizes the services of
the attorney who represents a party financing
the transaction. To the extent that both
parties seek a marketable title, there would
appear to be no conflict between their
interests. Nevertheless, a possible conflict
may arise concerning the terms of the
financing, and therefore at the time of the
retainer the attorney should make clear to the
buyer the potential area of conflict. In
addition, if the buyer's interests are
protected only to the extent that they
coincide with those of the party financing the
transaction, the attorney should explain the
limited scope of this protection so that the
buyer may act intelligently with full
knowledge of the facts.
In our Opinion 51, supra, we emphasized the importance and
necessity of full disclosure before accepting dual representation,
indicating that an attorney must make his determination to accept
or reject based on the facts and circumstances peculiar to each
case. We said:
...Again, we believe the situation here to be
significantly different from the case where an
attorney represents both the purchaser of a
home and the local lending institution that
supplies the mortgage funds. That is a very
common practice and in general quite
unobjectionable. In the case we are
considering, however, the desire to continue
to represent the lender as more homes are sold
in the future will naturally abate the ardor
with which the attorney will strive to secure
the best terms for the purchaser. The wish to
maintain existing relationships both with the
seller and the lender will cause the attorney
to shy away from the alternative of seeking to
induce all parties to permit the financing to
be placed elsewhere upon more favorable terms,
should this be possible. Only after a very
full disclosure to the client of these
possibly disabling factors should an attorney
already representing the lender, under
circumstances such as these, agree to accept a
retainer from the buyer.
It seems appropriate to observe, at this point, that the
foregoing has no application to transactions where one of the
parties is a public agency. In such circumstances the public
interest is involved and an attorney may not represent conflicting
interests even with the consent of all concerned after full
disclosure. Drinker, Legal Ethics 120 (1963); Chief Justice
Weintraub in "Notice to the Bar," 86 N.J.L.J. 713 (1963); Ahto v.
Weaver, 39 N.J. 418, 431 (1963); N.J. Advisory Committee on
Professional Ethics, Opinion 4, 86 N.J.L.J. 357, 361 (1963);
Opinion 29, 87 N.J.L.J. 106 (1964); Opinion 54, 87 N.J.L.J. 689
(1964); Opinion 65, 87 N.J.L.J. 810 (1964); Opinion 67, 88 N.J.L.J.
81 (1965); and Opinion 69, 88 N.J.L.J. 97 (1965).
In conclusion we wish to again emphasize the importance of
full disclosure, as explained above, followed by express consent of
a11 concerned before a lawyer should accept the representation of
conflicting interests.
* * *
This archive is a service of
Rutgers University School of Law - Camden