104 N.J.L.J. 447
November 15, 1979
Municipal and Other Attorney -
Clients' Confidences in Real Estate Sale
Inquiry has been made by the attorney for the seller and by the attorney for the buyer concerning the obligation of an attorney to preserve his client's confidences and secrets in a real estate transaction. Attorney A, a municipal attorney with a private practice, in the course of representing a seller in a real estate transaction, in which the contract of sale has been executed but title has not been transferred, discovered that his client is utilizing the premises in a manner in apparent violation of the zoning ordinance in the municipality in which A is municipal attorney, and is also violating the Hotel and Multiple Dwelling Act, N.J.S.A. 55:13A-1, et seq. Attorney A advised his client to abate the violations and asked his client to apprise the municipality of the situation. Attorney A also notified attorney B, the attorney for the buyer, of the apparent violations in order to avoid any problem that might arise in connection with the closing of title. Both the seller and the buyer have agreed to take no corrective action and have decided to make no disclosure to the municipal officials.
Should attorney A or attorney B, prior or subsequent to the closing of title, disclose the apparent zoning and building violations to the appropriate officials? DR 4-101 concerning protection of confidences and secrets provide that an attorney is not permitted to disclose information which would be embarrassing or would be likely to be detrimental to a client provided such information was gained in the course of the professional relationship unless the client has consented to the disclosure, the disclosure is permitted under the Disciplinary Rules or required by law or by a court order, the disclosure is of information necessary to prevent a crime intended to be committed by the client, or the disclosure is necessary for the attorney to collect his fee or defend an accusation of wrongful conduct.
The knowledge of both attorney A and attorney B was gained in the course of their professional relationships with their clients and any disclosure by either attorney A or attorney B prior to or subsequent to the transfer of title to the premises would either be embarrassing or detrimental, or both, to their respective clients. Therefore, attorney A and attorney B are prohibited from making the disclosure unless one of the exceptions referred to above and set forth in DR 4-101(C) applies. Both claims raffles to consent to any disclosure. Neither attorney needs the disclosure in order to collect a fee or defend an accusation of wrongful conduct. The conduct of neither client would constitute the commission of a crime or the intent to commit a crime. See Opinion 247, 95 N.J.L.J. 1271 (1972). There is no court to contend with; nor based upon the facts presented is there any law which requires attorney A because of his position as municipal attorney to disclose this information acquired as a result of his representation of the seller in a real estate transaction. A fortiori, attorney B has no duty to reveal the information which was acquired by him in his professional capacity on behalf of his client. Finally, the disclosure is not permitted under the Disciplinary Rules. The only Disciplinary which might arguably permit disclosure is DR 7-102(B)(1). However, under the present facts, that Disciplinary Rule does not apply. See Opinion 364, 100 N.J.L.J. 90 (1977). Therefore, none of the exceptions to DR 1-101(B) set forth in DR 4-101(C) applies to the present situation.
For these reasons, we find that both prior to and subsequent to the transfer of title, both attorney A and attorney B are precluded from disclosing the information obtained by them in the course of their professional relationships with their clients. We also are of the opinion that attorney A, because of the fact that he is the municipal attorney, upon learning of the apparent violation should have withdrawn as attorney for the seller. This result may appear to be contrary to Opinion 414, 103 N.J.L.J. 17 (1979), but that opinion is factually distinguishable because the attorney was required by law to make disclosure and any concealment of information by him would have been tantamount to fraud and deception.