BAR ASSOCIATION OF NASSAU COUNTY COMMITTEE ON PROFESSIONAL ETHICS
Opinion  No.  2009-2

(Inquiry No. 788)

Topic

Whether a lawyer can represent a client in a sale or purchase of real estate where the lawyer's wife is the real estate broker handling the transaction.

Digest

A lawyer who represents a client in a sale or purchase of real estate, where the lawyer's wife is the real estate broker handling the transaction, cannot proceed with the representation.

Code Provisions

Rules of Professional Conduct Rule 1.7(a) Facts Presented

A lawyer wants to represent a client in a sale or purchase of real estate where the lawyer's wife is the real estate broker handling the transaction.

Determination

A lawyer may not represent a client in the sale or purchase of real estate where the lawyer's spouse is the real estate broker handling the transaction.

Analysis

Rule 1.7(a) of the Rules of Professional Conduct states in pertinent part:

(a)        ...a lawyer shall not represent a client if a reasonable lawyer would conclude that

either:

(1)               the representation will involve the lawyer in representing differing interests; or

(2)               there is a significant risk that the lawyer's professional judgment on behalf of a client will be adversely affected by the lawyer's own financial, business property or other personal interests (emphasis added).

Rule 1.7(a) of the New York Rules of Professional Conduct.


In BANC 07-1, this Committee determined that an attorney retained as a real estate broker for a seller of real property and asserting a right to a broker's commission may not also serve as the attorney for the lender at the closing of the transaction. This committee reached that conclusion because the attorney's right to a broker's commission gives the attorney a financial stake in the transaction and creates a potential conflict of interest between himself and his legal client, the lender. The conflict presented in the instant inquiry is no different. The fact that the broker's commission will be received by the lawyer's spouse and not the lawyer does not alter the result. A conflict of interest exists which precludes the attorney from representing a party to a real estate transaction where his spouse is the real estate broker.

That is because any monies received by the lawyer's wife will affect the lawyer's own financial interest. "The intimate relationship and economic interests of husband and wife are inseparable; the acts of one directly affecting the other." NY State 340 (1974); see also NY State 244 (1972)("The relationship between husband and wife is sufficiently close and financially so intermingled...").

Our opinion here also is consistent with NY State 493 (1978) where it was held that "a lawyer cannot act ...on behalf of any party to a real estate transaction in which the lawyer or his spouse has acted as a broker, because of the possible conflict between the interests of the client and those of the lawyer." See also NY State 291 (1973)("Even though the lawyer personally does not own or have an interest in the real estate agency but his spouse owns or has such interest, it would be improper...for the lawyer to receive a legal fee in such circumstances.").

As such, it is the conclusion of this Committee that a lawyer may not represent a client in a sale or purchase of real estate where the lawyer's wife is the real estate broker handling the transaction.

[Approved by the Full Committee on December 16, 2009]

 


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