87 N.J.L.J. 97
February 13, 1964
Conflict of Interest
Fee Paid by Client's Customer
May an attorney for a seller of real property accept a fee from a purchaser thereof pursuant to an agreement entered into between the purchaser and seller, wherein the purchaser has agreed with the seller to pay a specific legal fee to the attorney on behalf of the seller for services rendered to the seller?
The member of the bar who submits this question makes it clear that (1) it is circumscribed by the fact that the fee to be paid would be entirely separate and apart from any fee which the purchaser might pay to the attorney for services rendered to such purchaser and (2) the determination and payment of the fee for services rendered by the attorney to the seller would be resolved in a manner consistent with the ethical standards required by In re Kamp, 40 N.J. 588 (1963).
Since the hypothesis is that the ethical standards required by In re Kamp, supra, will be met, the question here is simply whether an attorney for the seller may accept a fee from a purchaser pursuant to an agreement of sale entered into between the purchaser and seller by virtue of which the seller's attorney is to be paid a specific legal fee by the purchaser for his services actually rendered to the seller only. The amount of the fee must, of course, be fixed by the attorney for the seller, consistent with the requirements of Canons of Professional Ethics, Canon 12.
It has long been recognized that banks and other lending institutions granting mortgage loans, require borrowers to pay the expenses involved in the making of the loan, which expenses include a reasonable fee of the lender's attorney for his services performed for said lender; that this is an ethical practice so long
as it is made clear to the borrower that the attorney represents the institution alone, and not the borrower. Assn. of the Bar, City of N.Y., Committee on Professional Ethics, Opinion 695 (1946).
In Opinion 13, 87 N.J.L.J. 1 (1964), of this Committee, it was said:
Most, if not all, of the questions raised herein would be obviated if the language of agreements for the sale of homes in development tracts were clear, and unambiguously and forthrightly advised the purchaser as to the precise nature of the representation of the attorneys named in the agreement - that they represented the seller only, or the lender, or both, as the case may be - but that they will not represent the buyer and that the buyer is expressly advised to have his own attorney to protect his interests.
It was further said:
Assuming the $350 fee was not fixed by the
attorneys, there is an impropriety on the part of the
attorneys in permitting others to fix their fee for the
reasons set forth in our Opinion 7, 86 N.J.L.J. 405
We note that the question propounded to us makes it clear that the fee to be paid to the attorney for the seller is to be for services actually rendered. While the inquiry is not explicit as to the fixing of the fee, we assume that it will be fixed by the attorney for the seller in a manner consistent with the provisions of Canon 12.
It is, therefore, our opinion that under these circumstances it is professionally proper for the attorney for the seller to accept a fee so determined from the buyer for his services rendered on behalf of the seller; but such fee shall only be for such reasonable compensation as may be agreed upon and with the attorney, and not such fee as has been determined solely between the parties.