Legal Question in Legal Ethics in California

Should my Atty and Broker be disclosing this agreement??

I have an attorney who I've hired to protect me in this situation in a real estate situation. Initially, he advised me against a short sale and encouraged either a Deed Lieu or Anti-Deficiency. He advised against the short sale and/or as-is sale saying I shouldn't unless there was a monetary gain for me and that I would also be leaving myself open for a potential lawsuit with the as-is sale.

Last week, he brought forward the ''idea'' of a short, as-is sale and had a Broker (who does business with him) to list it, because now he (my atty) felt that paying off the 1st and negotiating the 2nd with the lender would be more favorable for my result than to do what he initially suggested ... Deed in Lieu or Anti-Deficiency. I have agreed to this ... signed the listing agreement and have received some offers. Here's where things become interesting and when my question of ethics also comes in. He has a written agreement with the Broker to ''split'' any proceeds after my financial obligations are covered. Should my Atty and Broker be disclosing this agreement they have between themselves with me? They could be making money off this deal ... especially when he initially advised me against it.

I look forward to your reply.


Asked on 6/12/05, 12:07 pm

1 Answer from Attorneys
Eugene Lee Law Office of Eugene Lee

Re: Should my Atty and Broker be disclosing this agreement??

An attorney should not split fees with any non-attorney. That's the clearest violation of the California lawyer's ethics rules there is. The attorney should also be disclosing to you any financial interest he has in your transaction -- another clear violation of the ethics rules. That's called a "conflict of interest".

You should contact the Calif. Bar Ethics Hotline and make a complaint against your attorney. Or you could wait a reasonable time, say after the closing is over, then call. Here's the number: 1-800-238-4427.

Sorry to hear about your lawyer's behavior. They're a discredit to the rest of us lawyers.

Gene Lee

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Answered on 6/14/05, 8:15 am


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