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’S 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 94-08
May the attorney represent the Buyer, the Seller, and the Lender at the real estate closings?
Summary:
An attorney may represent all three (3) parties to a real estate closing without violation of the Rules of Professional Conduct provided, however, that no negotiation is required, there is no problem which has arisen which may jeopardize the real estate closing, there is no party relying on the advice of the attorney for substantive advice about how or whether to proceed, there has been full disclosure of the potential for conflict to all the parties to the real estate closing, all of the parties understand their right to seek other legal counsel, and all parties agree. Further, the attorney must reasonably believe that the representation will not adversely effect any part of the real estate closing.
Opinion:
Similarly posed questions have been the topic of several SC Bar Advisory Opinions in the past, and each Opinion reaches the conclusion that the simultaneous representation of multiple parties at a real estate closing does not create an impermissible conflict of interest.
It is clear 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 relationship it will create and effect. Yet it is also clear that the parties have a unified interest in consummation of the transaction.
See SC Bar Advisory Opinion 91-30.
The general rule concerning simultaneous representation of parties should be used as a guideline in concluding whether or not there is an impermissible conflict of interest in any real estate closing. This general rule, which is Rule 1.7(b), sets forth and states as follows:
A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
1) The lawyer reasonably believes the representation will not be adversely affected; and 2) The client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.
In this factual scenario, provided the lawyer gives full disclosure to all the parties concerning his relationship with the Corporation and his wife's investment in the Corporation, and all the parties consent after such consultation, there is no ethical prohibition against the described multiple representation. (See SC Bar Advisory Opinions 82-20, 89-17, and 92-03.) We conclude that as long as the lawyer is employed simply to perform the ministerial acts associated with real estate closings, there is no conflict of interest and thus no breach of Rule 1.7. However, if any negotiation is required on behalf of any of the parties, or if any party is relying on the lawyer for substantive advice about how or whether to proceed, our analysis would very well lead to a different conclusion.