At a real estate closing, can a lawyer represent only the seller (who pays the fee) and tell the buyer in writing that the lawyer is not the buyer's lawyer?

Plain-English summary

A seller asked a lawyer to conduct all of its real estate closings, with the seller paying all attorney's fees and the closings held at the lawyer's office. The seller wanted the lawyer to represent only the seller, in part so the lawyer would have no duty to disclose to the buyer certain facts that could lower the price the buyer would pay. The committee was asked whether the lawyer could ethically represent only the seller if the lawyer disclosed in writing to the buyer that the lawyer did not represent the buyer, and what disclosure was required.

The committee concluded a lawyer could represent only one party at a closing, provided the lawyer complied with Rule 4.3 (dealing with an unrepresented person): the lawyer could not state or imply being disinterested and, knowing the buyer might misunderstand the lawyer's role, had to make reasonable efforts to correct the misunderstanding. Under the rule, the seller's lawyer had to disclose that the lawyer represented only the seller and that the buyer should retain separate counsel, and the lawyer could prepare and present closing documents for the buyer's signature but could not advise the buyer about them. The committee also referenced the Rule 1.7 comment on assessing non-litigation conflicts and Rule 1.8(f) where the fee was paid by another.

The committee cautioned that the transaction was very risky, because whether an attorney-client relationship is created is a question of fact that does not depend on a formal agreement or fee, and that telling a person no relationship is intended will not necessarily prevent one from forming. Finally, it noted that a lawyer may not counsel or assist a client in conduct that is fraudulent (Rule 1.2(d)), while leaving the legal question of whether nondisclosure of facts affecting value would constitute fraud to other authorities.

Currency note

This opinion was issued in 2000, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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: Could a lawyer represent only the seller at a closing and not the buyer?

A: The committee concluded yes, if the lawyer complied with Rule 4.3 by disclosing that the lawyer represented only the seller, advising the buyer to obtain separate counsel, and giving the buyer no legal advice about the documents.

Q: Did telling the buyer "I am not your lawyer" prevent a client relationship from forming?

A: The committee concluded not necessarily: whether an attorney-client relationship is created is a question of fact, and stating that no relationship is intended will not necessarily prevent one from being established.

Q: Could the lawyer help the seller avoid disclosing facts that lowered the property's value?

A: The committee concluded a lawyer may not counsel or assist a client in fraudulent conduct under Rule 1.2(d), while treating whether nondisclosure would amount to fraud as a legal question beyond its jurisdiction.

Background and rules framework

The opinion interpreted South Carolina RPC 4.3 (dealing with an unrepresented person), 1.7(b) (conflicts in common representation), 1.8(f) (fee paid by a third party), and 1.2(d) (no assistance with fraud), corresponding to the like-numbered Model Rules. The committee relied on its Opinions 00-01, 97-19, 94-08, 91-03, and 99-13, and on case law including In re Warder and In re Morgan.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 4.3 / Model Rule 4.3: dealing with an unrepresented person.
• South Carolina RPC 1.7(b) / Model Rule 1.7: conflicts and common representation.
• South Carolina RPC 1.8(f) / Model Rule 1.8(f): fee paid by someone other than the client.
• South Carolina RPC 1.2(d) / Model Rule 1.2(d): no counseling or assisting client fraud.

Cases:

• In re Warder, 316 S.C. 249, 449 S.E.2d 489 (S.C. 1994), and In re Morgan, 288 S.C. 401, 343 S.E.2d 29 (S.C. 1986), formation of an attorney-client relationship.

Other opinions cited:

• S.C. Bar Ethics Advisory Ops. 00-01, 97-19, 94-08, 91-03, 99-13 (representation at closings and formation of the relationship).

See also

• SC Bar Ethics Op. 02-16: When a lawyer who owns the seller helps the buyer at closing
• SC Bar Ethics Op. 03-07: A firm sharing a title insurance premium in a real estate closing

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-00-17/

Original opinion text

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

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 00-17

Seller has requested Lawyer conduct all real estate closings for it. Lawyer would handle closings for both Seller and Buyer. Seller would agree to pay all attorney's fees, and closing must take place at Lawyer's office. Seller wants Lawyer to represent only Seller in the transactions. One reason is so that Lawyer would not be under any ethical requirement to disclose to Buyer certain facts which, if known, could have a possible adverse affect on the price Buyer would be willing to pay.

QUESTIONS:
May Lawyer ethically represent only Seller in a real estate closing when Seller and Buyer have agreed that Seller will pay all attorney's fees and closing must be held in Lawyer's office if Lawyer discloses in writing to Buyer that Lawyer does not represent Buyer? If so, what degree of disclosure is required?

OPINION:
This Committee has on numerous occasions dealt with the issue of who a lawyer represents at closings of real estate transactions. The Committee has advised that a lawyer may represent multiple parties at real estate closings provided the lawyer complies with the requirements of Rule 1.7(b). See, e.g., S.C. Ethics Adv. Op. 00-01, 97-19, 94-08. If one of the parties pays the lawyer's fee, the lawyer must comply with Rule 1.8(f). S.C. Ethics Adv. Op. 00-01.

A lawyer may handle a real estate closing in which the lawyer represents only one of the parties, such as the developer or lender, provided the lawyer fully discloses to unrepresented parties the identity of the lawyer's client and does not purport to give legal advice to the unrepresented parties.

A lawyer may ethically represent only the seller at closing provided the lawyer complies with the requirements of Rule 4.3 (Dealing with Unrepresented Person). The rule states: In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.

The comment to the rule provides: An unrepresented person, particularly one not experienced in dealing with legal matters, might assume that a lawyer is disinterested in loyalties or is a disinterested authority on the law even when the lawyer represents a client. During the course of a lawyer's representation of a client, the lawyer should not give advice to an unrepresented person other than the advice to obtain counsel. (emphasis added).

Under this Rule the seller's attorney must disclose to the buyer that the attorney represents only the seller, not the buyer, and that the buyer should retain separate counsel for advice about legal aspects of the transaction. In closing the transaction the attorney may prepare on behalf of the seller documents necessary to close the transaction and may present the documents to buyer for the buyer's signature, but the attorney may not advise the buyer regarding these documents.

The Committee makes reference to the comments to Rule 1.7, including the following: Conflicts of interest in contexts other than litigation sometimes may be difficult to assess. Relevant factors in determining whether there is potential for adverse effect include the duration and intimacy of the lawyer's relationship with the client or clients involved, the functions being performed by the lawyer, the likelihood that actual conflict will arise and the likely prejudice to the client from the conflict if it does arise. The question is often one of proximity and degree. For example, a lawyer may not represent multiple parties to a negotiation whose interests are fundamentally antagonistic to each other, but common representation is permissible where the clients are generally aligned in interest even though there is some difference of interest among them.

While the Committee has concluded that a lawyer may ethically represent only the seller, not the buyer, provided the attorney complies with the requirements of Rule 4.3, the Committee cautions that such a transaction is very risky. Case law and prior opinions of this Committee have found that whether an attorney-client relationship is created is a question of fact. In Ethics Advisory Opinion 91-03, we stated that A)(i)n determining whether an attorney-client relationship existed. . ., the focus must be on the subjective expectations' of the would-be clients >such that their individual belief and reliance are safeguarded. Glover v. Lieberman, 578 F. Supp 748 (N.D. Ga. 1983).@ An attorney-client relationship does not depend on the existence of a formal agreement or the payment of a legal fee. Whether an attorney-client relationship exists in a particular situation is a question of fact. Chavez v. State, 604 P. 2d 1341 (Wyo. 1980). In Ethics Advisory Opinion 99-13, we made the following reference: ASee In re Warder, 316 S.C. 249, 449 S.E.2d 489 (1994); In re Morgan, 288 S.C. 401, 343 S.E.2d 29 (1986) (when lawyer takes legal action on behalf of a person, an attorney-client relationship is formed if the attorney fails to inform the person that no such relationship is intended.

Here, Lawyer intends to inform Buyer that no such relationship is intended. It is the opinion of the Committee that informing a person that no attorney-client relationship is intended will not necessarily prevent such a relationship from being established anyway. The formation of the relationship would depend on the particular facts and circumstances of each case.

The questioner states that one of the reasons the seller wishes to limit the attorney's representation to the buyer is to prevent the attorney from having a duty of disclosure to the buyer of certain facts that affect the value of the property. A lawyer may not counsel or assist a client, including closing of a real estate transaction, in conduct that constitutes a fraud. S.C. Rule 1.2(d). Whether nondisclosure of facts that affect the value of property would constitute a fraud by the seller is a legal question beyond the Committee's jurisdiction.