Opinion 228
Question Presented
- Each bank in a city employs attorneys on a retainer basis for $100 per year. Each bank then refers its customers to its attorney who charges such customers a fee for his services based upon regular fee charges.
Is it a violation of the Canons of Ethics (a) for an attorney so retained to advise customers of the bank upon applying for real estate loans that if they want the bank to make the loan, they must employ the bank's attorney to prepare all papers involved in the transaction; or (b) for the officers of the bank to automatically refer their customers to the bank's attorney without inquiring as to their choice of counsel; or (c) for the bank's officers to advise their customers that the bank has an attorney and they do not need to employ their own attorney?
- Is it a violation of the Canons of Ethics for an attorney representing the buyer in a real estate transaction to advise the seller as follows: "I am representing [ ], buyer, and will inspect the papers for him and prepare the deed of trust and notes. If you want me to do so, I will prepare your deed for $[ ] (nominal fee) and will charge that fee to the buyer. If he wants you to pay this, and you agree, he can so provide; however, I want you to understand that I am not representing you in this transaction."?
18 Baylor L. Rev. 309 (1966)
SOLICITATION - INTERMEDIARIES - LENDING INSTITUTION REQUIRING USE OF DESIGNATED ATTORNEY
A bank has the right to select its own attorneys and to require that these attorneys prepare the mortgage and promissory notes in connection with a loan made by the bank; the attorneys so selected may properly accept such employment and may advise prospective borrowers of this policy. Other papers such as deeds and curative matter should be prepared by the attorney selected by the borrower.
CONFLICTING INTERESTS - SAME ATTORNEY FOR BOTH PARTIES IN A REAL ESTATE TRANSACTION
An attorney, after a full disclosure of the facts to all parties, may properly represent both the buyer and seller of real estate if the parties agree thereto.
SOLICITATION
The attorney for a buyer of real estate may not advise the seller that he is representing the buyer and will thus prepare the deed of trust and promissory notes and that he will prepare the deed for the seller either at buyer's or seller's expense according to their desires.
Canons 6, 24, 32.
- All members agree that the bank has a right to require that the bank's attorney prepare the mortgage and promissory note. Five members conclude that other papers such as deeds and curative matters should be prepared by the attorney selected by the borrower. The attorney fees should be charged by the attorney and not by the bank. Two members rely upon Opinion 150 to conclude that the bank has the right to select its own attorneys and to require that these attorneys prepare all papers in connection with a loan made by the bank, and that the selected attorneys may properly accept employment to prepare all of such papers. (5-2.)
All members agree that the borrower can and should employ his own attorney to represent him in the transaction.
- The buyer and seller may each have an attorney or they may agree to use the same attorney. If, after a full disclosure of the facts, the parties agree to the use of the same attorney and also agree as to which party shall pay the fees, all without solicitation by an attorney, the attorney may properly represent the otherwise conflicting interests and either party may properly pay the fees.
However, the advice to the seller quoted in the inquiry is a direct solicitation by the attorney of employment to prepare the deed for the seller and is a violation of Canon 24. (7- 0.)
Bluebook Citation
Tex. Comm. On Professional Ethics, Op. 228 (1959)