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Conflicts of Interest – Acting for both Parties in a Conveyance

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It is not unusual in the Gold Coast and Northern New South Wales areas for lawyers to have already acted for both parties in a proposed conveyance, due to past dealings with those clients.

Attwood Marshall Lawyers face this situation regularly because we have such a large client base in this area.

There are also some real estate agents (hopefully not many!) who actively refer both parties in a conveyance to the same solicitor or conveyancer because they believe that this will make things easier and not cost as much.

Solicitors can act for both parties in a conveyance but they must disclose this fact to both parties and they must also advise them that:-

  •     The lawyer might not be able to give all of the information relevant to the matter to all of the parties; and
  •     The clients accept that the practitioner will not give one client advice that is against the interests of another client.
  •     Both parties must accept the arrangement.

Conveyancers have similar obligations of disclosure to the client.  Both clients must agree in writing.

It is our strong view and part of our policy that we do not act for both parties in any transaction. We believe it is unethical and a conflict of interest.

It is difficult for any professional person to be truly independent if they act for both parties in a transaction. There is an obvious conflict of interest which simply cannot be avoided in the event that even the most trivial dispute occurs in the transaction. No matter what the subject matter of the dispute, whatever position the solicitor takes, the aggrieved party will naturally feel that the solicitor has taken the side of the other client. It is a no win situation for the solicitor involved and it is difficult to understand why solicitors or even conveyancers continue this practice.

The Law Societies of both Queensland and New South Wales do not encourage the practice although it is permitted for solicitors to act for both parties, provided they follow the pre-conditions set out in the Solicitors Rules.

The Legal Services Commission in New South Wales in their “Fact Sheet 13” states:-

For example, acting for both the buyer and seller of a property is unwise, although permitted.

In most jurisdictions, the professional indemnity insurers of solicitors impose a large penalty “excess” for any claims that are brought by disgruntled clients against the solicitor where they have acted for both parties in a transaction.

In the event of a dispute arising between two parties where they have the same  solicitor or conveyancer, both parties must be referred away to alternative solicitors or conveyancers due to the obvious conflict of interest. This would mean both parties would have to “start again” and engage fresh representation in relation to the transaction.  If people agree to a solicitor or conveyancer acting for both parties to save money, inevitably if there is a dispute, it will end up costing them a lot more.

Buying and selling your home is probably one of the largest investments that most people make in their lives. It is difficult enough these days to ensure that your interests are protected and that you obtain proper legal representation. People should not put such a large investment at risk purely to save a couple of hundred dollars on someone acting for both parties in a transaction.

There is also a danger for real estate agents who actively refer their clients or suggest that they use the same solicitor or conveyancer.  If something goes wrong in a transaction and the clients sue the solicitor or conveyancer involved, it is inevitable that any real estate agent who has referred the clients to this solicitor or conveyancer will be joined as a defendant in the proceedings.  If real estate agents wish to see their matter protected from these issues, it is more prudent to insist that clients have separate representation in relation to their property transactions.

We have a specialist Conveyancing team that has senior commercial lawyers, licenced conveyancers and highly trained and supervised paralegals to get the job done.

You are welcome to contact our office at any time if you need advice on a property or commercial matter. Please contact Property and Commercial Department Manager, Jess Kimpton on direct line 07 5506 8214 or email jkimpton@attwoodmarshall.com.au

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