Do we really EACH need a lawyer?

Three are various types of situations where clients ask lawyers to represent multiple parties.  Sometimes, with informed consent of the parties, we can undertake representation of multiple parties, and sometimes we cannot.  There are a couple of situations where this potential conflict comes up in real estate transactions.  As a real estate attorney, sometimes I have to say no to multiple representations from the get-go, and sometimes I can discuss the potential for actual conflict with the clients and proceed until an actual conflict arises.

The “simple” transaction:  Occasionally, a buyer or seller of real estate will ask an attorney to represent both the buyer and the seller because it is just a “simple” transaction.  The transaction may be for little or no money.  A client may be “Quitclaiming” a piece of property to a family member or neighbor for free or for a nominal amount.  Sometimes the sale is for market value but the parties have already come to a verbal agreement, even without a realtor, and want to just “get this done” without “wasting money” on an extra lawyer.  Sometimes a seller in one of these “simple” transactions wants to take back a Promissory Note and Mortgage on the property, which creates an even greater conflict that isn’t always apparent to the client.  The client may feel that both sides are in agreement and the lawyer “just needs to draw up the paperwork,” but the potential for conflict is just too great if an attorney attempts to represent a buyer and a seller in the same transaction.  This conflict becomes more apparent if the parties want to involve a private mortgage where the lawyer would essentially be representing both sides in the active negotiation of a contract.  One attorney cannot fully and “zealously” advocate for parties who are on opposite sides of a transaction.

The lender transaction:  Quite often an attorney is asked to represent both a borrower and a lender in the purchase of real property with mortgage funds.  This situation has more “wiggle” room than those described above.  New Hampshire and Vermont both have ethics advisory opinions that allow for such multiple representations in certain situations.  New Hampshire views it a little less favorably than does Vermont.  The important thing to remember, as a borrow, is that your lender is going to require that they are the Number 1 Client.  A lot of the work that needs to be done and the problems an attorney needs to watch for in a real estate purchase are the same from both the lender and the borrower’s point of view.  However, if a conflict arises, the attorney’s first duty is to the lender in the multiple representation situations, and the attorney will most likely have to bow out of the transaction all together, which may cost the borrower time and extra attorney fees.  The safest thing a borrower/buyer can do is to obtain their own separate counsel in addition to the counsel required by the lender for title work and settlement on a lender’s behalf.