I'm a real estate attorney who owns half of a mortgage brokerage. Can the brokerage use me to close its loans, can a borrower waive independent title counsel and use me instead, can I also handle the purchase-and-sale closing, and can I share office space and overhead with the brokerage?

Plain-English summary

An attorney with a real estate practice, who owned a 50% interest in a mortgage brokerage corporation, asked the panel about potential conflicts of interest in four related scenarios (the digest frames five sub-questions building on one another).

First, the attorney asked whether a conflict would arise if the mortgage brokerage used his services as an attorney to close its loans. The panel held this relationship was permissible under the Code.

Second, building on the first scenario, the attorney asked about a borrower who executes a written waiver of the right to select independent title counsel and elects in writing to have the attorney for the mortgage company handle the borrower's title work instead. The panel quoted EC 5-19, which permits a lawyer to represent several clients whose interests are not actually or potentially differing, while requiring the lawyer to explain any circumstances that might cause a client to question the lawyer's undivided loyalty. The panel held this second scenario presented no Code violation, assuming the attorney had fully disclosed his business relationship to the mortgage company.

Third, incorporating the first two scenarios, the attorney asked whether he could also represent the borrower/buyer in closing the purchase-and-sale agreement, in addition to closing the loan and doing the title work. The panel held this presented no violation provided the attorney adhered to EC 5-19's full-disclosure requirement.

Finally, the attorney asked whether he could share office space with the mortgage company in the same suite, and share overhead costs such as a receptionist and conference room. The panel held these space- and cost-sharing arrangements were permissible under the Code.

Currency note

This opinion was issued in 1988, before the Rhode Island Supreme Court's adoption of the 2007 revisions to the Rules of Professional Conduct, and it applies the ABA Model Code of Professional Responsibility's Ethical Considerations then in effect. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: I own part of a mortgage brokerage. Can I do the legal work when the brokerage closes its own loans?

A: Yes, according to this opinion; the panel held this relationship permissible under the Code.

Q: Can a borrower waive independent title counsel and use me instead, given my ownership stake in the mortgage company?

A: Yes, provided the attorney has fully disclosed the business relationship to the mortgage company, per EC 5-19's requirement to explain circumstances that might cause a client to question the lawyer's undivided loyalty.

Q: Can I also handle the borrower's purchase-and-sale closing on top of the loan closing and title work?

A: Yes, according to the opinion, as long as the same EC 5-19 disclosure requirement is met.

Q: Can my law office and the mortgage brokerage share space and split overhead costs?

A: Yes. The panel held that sharing a suite of offices and splitting costs like a receptionist and conference room is permissible under the Code.

Background and rules framework

The opinion applies EC 5-19 of the ABA Model Code of Professional Responsibility, then in force in Rhode Island, which permits a lawyer to represent multiple clients whose interests are not actually or potentially differing, so long as the lawyer explains any circumstances that might cause a client to question the lawyer's undivided loyalty, to a lawyer's ownership interest in, and joint operations with, a mortgage brokerage he also serves as counsel.

Citations and references

Rules of Professional Conduct:

• RI EC 5-19 (disclosing circumstances that might cause a client to question the lawyer's undivided loyalty)

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• Alabama Bar Opinion 1989-99: Representing Buyer and Seller in a Real Estate Transaction: another dual-representation-in-real-estate-closing opinion, requiring consent after full disclosure.

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2088-26.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

DIGEST OF ETHICS ADVISORY PANEL
OPINION #88-26, REQUEST #23
October 20, 1988

An attorney seeks Panel advice as to whether conflicts of interest would arise in five specific situations.

First, the attorney describes himself as an attorney with a real estate practice who owns a 50% interest in a mortgage brokerage corporation. He asks whether a conflict of interest would arise if the mortgage brokerage entity utilizes his services as an attorney in closing its loans. The Panel takes the position that this relationship is permissible under the Code of Professional Responsibility.

In a second scenario, the attorney incorporates the first situation, but adds a potential borrower who executes a written waiver of his right to select independent title counsel and elects, in writing, to have the attorney for the mortgage company represent his interest with regard to the title work. Ethical Consideration 5-19 provides, in part, that "a lawyer may represent several clients whose interests are not actually or potentially differing. Nevertheless, he should explain any circumstances that might cause a client to question his undivided loyalty." In taking the position that this second scenario presents no violation of the Code, the Panel assumes that the inquiring attorney has fully disclosed to the client his business relationship to the mortgage company.

In a third scenario, the inquiring attorney incorporates the first two fact situations but adds the fact that the borrower/buyer wishes the inquiring attorney to represent him in the closing of the purchase and sale agreement in addition to representing him in closing the loan and doing the title work. The Panel takes the position that this third scenario presents no violation of the Code provided the inquiring attorney adheres to the full disclosure provisions of EC 5-19.

Finally, the inquiring attorney asks whether he may share space with the mortgage company in the same suite of offices, and whether he and the company may share the expense of overhead costs such as a receptionist and conference room. The Panel takes the position that the space and cost sharing arrangements described are permissible under the Code of Professional Responsibility.

Ethics Advisory Panel advice is protective in nature. There is no requirement that an attorney abide by a Panel opinion, but if he or she does, he or she is fully protected from any charge of impropriety.