clarification about attorney representation in real estate transaction

[criticalthinker]

What is the name of your state (only U.S. law)? MA

Most of the resources I have read that explain an attorney's role in a real estate transaction usually frame it in the context of the buyer or seller. However few seem to mention legal representation of the lender in a financed purchased. I would appreciate some clarification about it.

Let's say a borrower hires an attorney to review some contracts (i.e., broker agreement, offer, P&S, etc) early in the home shopping process. He selects a property, runs everything by his attorney and signs off on the P&S. He then submits a loan app and the lender sends out the disclosure package containing the "right to select an attorney" document. Assume the borrower elects to select an attorney and lists the name of the attorney he had been using up to this point.

Am I correct to assume that the lender is now the attorney's client, not the borrower, from that point forward?

Would the borrower have to sign some sort of written consent and understanding of the potential conflict of interest in order to have the attorney continue to represent him as well? Or, at that point if the borrower felt it necessary to have his own representation, would he simply hire another attorney?

Thanks in advance.

CT

 

[FlyingRon]

No that is not the case. The lawyer continues to represent the whomever hired him.

In some states, it's common for the attorney to handle the closing (where in others this is done by a dedicated escrow or title house). The lawyer just prepares the paperwork and holds the moneys in trust and pays them out as required. He has sort of responsibility to all the parties to do so equitably but he's only representing his original client.

 

[criticalthinker]

Hi FlyingRon,

Thank you for the quick reply. I appreciate it. I understand that a closing is supposed to be "party neutral" anyway with borrower and lender working toward the same goal.

However, here is why I'm confused...

Some States use an attorney selection form with language that implies the attorney represents both parties (lender and borrower) at the closing. Here's a sample document from the State of Georgia that includes the statement "I(We) have been informed that I(we) have the option to select an attorney to represent me(us) in all matters of this transaction relating to the closing of the loan."

http://66.192.134.82/NewWeb/stateforms/GA_AttnyPref.pdf

In contrast, we have disclosure requirements of the following type in MA which appear to differentiate between an attorney representing the lender and one representing the borrower:

http://66.192.134.82/NewWeb/stateforms/MA_ADD.pdf

Which brings me back to my original questions. Under the circumstances (the scenario I offered earlier as well as your response) do you maintain that the attorney selected by the borrower on the attorney preference form continues to represent the borrower even in the context of the financing?

Kind regards,

CT

 

[FlyingRon]

Nothing you have said changes my answer. The fact that a lawyer is handling closing doesn't change who he is representing. If you hired the lawyer, he represents you.

 

[criticalthinker]

Nothing you have said changes my answer. The fact that a lawyer is handling closing doesn't change who he is representing. If you hired the lawyer, he represents you.

Ok thank you. I appreciate the confirmation.

Any idea why MA even bothers with that disclosure? Seems meaningless in the context of what we just discussed.

 

[FlyingRon]

It informs you of your right to have a lawyer of your own choosing handle the settlement. The bank or the seller can suggest one, but it's up to you.