What happens when both the buyer and the seller of a real estate transaction approach the same lawyer? Can a real estate attorney represent both parties? The answer is a little more nuanced than a “yes” or a “no.”
Attorneys have responsibilities to their clients both present and former. In handling a legal matter, they have to identify any conflicts of interest so they can best advocate for their clients. These conflicts include identifying the attorney’s potential personal interests and any conflicts among the clients involved. When it comes to real estate transactions, attorneys have to keep information about the case confidential and representing both buyer and seller in a transaction can divide the attorney’s loyalty, and inhibit their ability to serve their clients well.
Considering the relationship between clients and lawyers ensures that lawyers follow rules and ethics standards set forth by the American Bar Association and the State Bar.
In the event that an attorney is retained by multiple parties in a related case, such as a real estate transaction, a conflict waiver may apply.
Rule 3-310 of the California Rules of Professional Responsibility addresses joint representation in transactions. The San Diego County Bar Association is helpful in this matter (emphases added):
“[An attorney] shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or (3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.”
There are some obvious cases in which the attorney cannot represent both parties, such as the defendant and prosecutor. In real estate transactions, if an attorney is retained by both buyer and seller, the ABA gives this specific example:
“Directly adverse conflicts can also arise in transactional matters. For example, if a lawyer is asked to represent the seller of a business in negotiations with a buyer represented by the lawyer, not in the same transaction but in another, unrelated matter, the lawyer could not undertake the representation without the informed consent of each client.”
This “informed consent of each client” is the conflict waiver. Before obtaining a waiver, the attorney must identify all possible conflicts in a case and if the case cannot be waived, a waiver should not be pursued. Instead, the attorney should decline representation given the conflicts. With real estate transactions, an attorney would ideally represent only the buyer or seller unless it’s under certain (but exceptional) circumstances such as clients being in the same family.
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Our real estate attorneys at Hoffman & Forde are here to determine the best options for your real estate transaction. Whether you’re the seller or buyer, we work with 0ur clients to ensure their rights are protected and that their transactions go smoothly. Our boutique law firm gives you access to a wide array of legal specialties, so that all aspects of your case or transaction are covered. If you need legal counsel for residential or commercial real estate matters, schedule a consultation with Hoffman & Forde today.