UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER鈥橲 CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 91-30
An attorney wishing to close a real estate transaction, including a mortgage loan from a third party lender, obtains Powers of Attorney from both the Purchaser and Seller.
Question:
May the attorney use the Power of Attorney to sign all necessary closing documents, including the note, mortgage, and deed, on behalf of both the Purchaser and Seller?
Summary:
Provided that the attorney is employed merely to perform the ministerial act of signing the closing documents, the Rules of Professional Conduct are not implicated.
If, however, the attorney is expected or required to provide legal advice about any aspect of the transaction he must first decide whether the circumstances of the transaction will adversely affect his ability to carry out his representation of both the Purchaser and Seller. If he can adequately represent both parties under the circumstances, he must then explain the nature and effect of the dual representation and obtain the consent of both parties to the dual representation.
Opinion:
At the outset it must be noted that this opinion addresses only the ethical issues implicated by the Facts and Question, and is not intended to express any opinion about the substantive legal issues raised by the use of a power of attorney to execute documents in a real estate transaction.
It is 91黑料爆料ar that in real estate transactions the Purchaser, Seller, and Lender often have competing, if not directly conflicting, interests. Each party has a need for legal advice about the nature of the transaction and the legal relationships it will create and effect. Yet it is also 91黑料爆料ar that the parties have a unified interest in consummation of the transaction.
Rule 1.7 of the Rules of Professional Conduct governs conflicts of interest. It addresses two distinct situations: (a) where an attorney seeks to represent clients whose interest are "directly adverse," and (b) where an attorney seeks to represent a client whose interests may "materially limit" the attorney's responsibility to other clients.
The interest of the Purchaser and Seller are usually not "directly adverse." Both have an interest in seeing that the transaction closes on the specified terms. Moreover, whether representation of the Purchaser may "materially limit" the attorney's responsibilities to the Seller, and vice versa, depends entirely upon the nature of the responsibility which the attorney undertakes for each.
If the attorney is employed simply for the purpose of performing the ministerial acts associated with "closing the deal," and he is neither expected nor required to render legal advice to either party in connection with the transaction, no conflict of interest appears and Rule 1.7 does not appear to be implicated. In this situation the attorney would be no different from a layman who closes a deal using powers of attorney from both sides.
However, if the terms of the deal are not decided, if any negotiation is required, if any problem arises which might jeopardize the closing, or if either party to the sale is relying on the attorney for substantive advice about how or whether to proceed, a conflict of interest arises which would implicate Rule 1.7. It is doubtful whether such a conflict could be waived by obtaining informed consent.