Can a mortgage company's attorney charge the seller a fee at a closing where the attorney represents the lender and the seller has no lawyer?

Plain-English summary

A member described a home sale in which the seller had to furnish the buyer a warranty deed, the buyer financed the purchase through a mortgage company, and an attorney employed by the mortgage company prepared the deed and closing papers and handled the closing. The buyer had his own attorney, but the seller had none and was charged an attorney's fee by the mortgage company's attorney. The questions were whether it is ethical for the mortgage company attorney to charge the seller a fee absent any agreement, and whether such a charge is ethical if the seller agreed with the buyer to pay all closing costs.

Because the inquiry arose from complaints to a prosecuting officer, two members declined to respond, the committee generally declining opinions on matters pending before a grievance committee. Three members responded: it is improper for the mortgage company attorney to charge the seller a fee absent any agreement between the attorney and the seller, but it is not improper to collect a reasonable fee where the seller has agreed with the buyer to pay all closing costs and the fee is part of those costs. In that situation the payment flows from the seller's obligation to pay closing costs, not from any obligation of the seller to the lender's attorney. The fee must be reasonable and within the buyer-seller agreement, and the seller should be fully advised of the circumstances, because the attorney represents the lending institution and the parties' interests could conflict; preferably the seller should have his own attorney.

Currency note

This opinion was issued in 1964, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canons 6 and 35 of the Canons of Professional Ethics; conflicts of interest are now governed by Rule 4-1.7, the reasonableness of fees by Rule 4-1.5, and a lawyer's dealings with an unrepresented person by Rule 4-4.3 of the Rules Regulating The Florida Bar (Model Rules 1.7, 1.5, and 4.3). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Could the lender's attorney charge the unrepresented seller a fee?

A: Not absent an agreement. The responding members said charging the seller a fee with no agreement between the attorney and the seller is improper.

Q: When could the attorney collect from the seller?

A: Where the seller had agreed with the buyer to pay all closing costs and the fee is part of those costs. The payment then flows from the seller's closing-cost obligation, not from any duty owed to the lender's attorney.

Q: What disclosure did the committee require?

A: The seller should be fully advised that the attorney represents the lender and that the parties' interests could conflict; preferably the seller should have his own attorney. The fee must be reasonable and within the buyer-seller agreement.

Background and rules framework

The opinion applied former Canons 6 (conflicting interests) and 35 (professional independence) of the Canons of Professional Ethics. Conflicts of interest are now governed by Rule 4-1.7, fee reasonableness by Rule 4-1.5, and dealings with an unrepresented person by Rule 4-4.3 of the Rules Regulating The Florida Bar (Model Rules 1.7, 1.5, and 4.3). The committee's concern was that the lender's attorney not bill a seller who never agreed to pay him, and that any permissible charge route through the buyer-seller closing-cost agreement with full disclosure.

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; conflicting interests; see current Rule 4-1.7]
• Canon 35 [professional independence; see current Rule 4-5.4]

See also

• FL Bar Ethics Op. 65-58: Disclosing Title Defects to an Unrepresented Borrower
• FL Bar Ethics Op. 66-29: A Fixed Monthly Fee for Mortgage-Lender Closings

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-64-56/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-64-56.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 64-56
September 29, 1964
Advisory ethics opinions are not binding.
It is improper for a mortgage company attorney to charge a seller an attorney's fee in the absence of any agreement between the attorney and the seller. It is not improper for the attorney to collect a reasonable fee for his services, provided the seller has agreed with the buyer to pay all closing costs, and provided the fee is part of the closing costs.
Canons: 6, 35
Chairman Smith stated the opinion of the committee:
The following factual situation is posed by a member of The Florida Bar: Seller agrees to sell his home to Buyer and is required by his agreement to furnish to Buyer a warranty deed. Buyer secures financing for the purchase through a mortgage company. An attorney employed by the mortgage company prepares the deed and all closing papers and handles the closing. Buyer is represented by his attorney. Seller has no attorney, but is charged an attorney's fee by the mortgage company attorney.
He asks (a) if it is ethical for the mortgage company attorney to charge Seller an attorney's fee in the absence of any agreement and (b) if such charge is ethical if Seller agrees with Buyer to pay all closing costs.
This Committee generally declines to render opinions on matters pending before a Grievance Committee. For that reason, and because the inquiry is pursuant to complaints made to a prosecuting officer, two members of the Committee decline to respond to the inquiry.
Three members of the Committee respond as follows. It is improper for the mortgage company attorney to charge Seller an attorney's fee in the absence of any agreement between the attorney and Seller. It is not improper for the attorney to collect a reasonable fee for his services provided Seller has agreed with Buyer to pay all closing costs and providing the fee is part of the closing costs.
In this case, the payment is made because of Seller's obligation to pay closing costs, not because of any obligation on the part of Seller to the mortgage company attorney. The fee must be reasonable and within the contractual agreement between Buyer and Seller. Further, Seller should be fully advised of the circumstances because the attorney represents the lending institution, not Seller, and the interest of these parties could well be in conflict. Preferably Seller should be represented by an attorney of his own choice.