Must a New Jersey lawyer (including a municipal attorney) disclose a client's zoning or building-code violations discovered during a real estate sale?

Plain-English summary

Attorney A, a municipal attorney with a private practice, represented a seller in a real estate transaction in which the contract was signed but title had not transferred. He discovered that the client was using the premises in apparent violation of the municipality's zoning ordinance and the Hotel and Multiple Dwelling Act, in the very municipality where A served as municipal attorney. A advised the client to abate the violations and notified attorney B, the buyer's attorney, to avoid problems at closing. Both seller and buyer agreed to take no corrective action and to make no disclosure to municipal officials. The question was whether A or B, before or after closing, should disclose the violations to the appropriate officials.

The Committee analyzed DR 4-101, which bars an attorney from disclosing information gained in the professional relationship that would embarrass or be detrimental to the client, unless a stated exception applies: client consent, disclosure permitted by the Disciplinary Rules or required by law or court order, disclosure of information necessary to prevent a client's intended crime, or disclosure needed to collect a fee or defend an accusation. The knowledge of both attorneys was gained in their professional relationships, and disclosure would be embarrassing or detrimental to their clients, so the prohibition applied unless an exception fit.

The Committee found none did: both clients refused consent; neither attorney needed disclosure to collect a fee or defend himself; the clients' conduct was not a crime or intended crime; no court or law required A to disclose despite his municipal position; and DR 7-102(B)(1) did not apply on these facts. It concluded both A and B are precluded from disclosing, before and after title transfer. It added that A, as municipal attorney, should have withdrawn as the seller's attorney on learning of the violations. The Committee distinguished Opinion 414, where the attorney was required by law to disclose and concealment would have amounted to fraud.

Currency note

This opinion was issued in 1979, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. It applied DR 4-101 (and considered DR 7-102(B)(1)); in current New Jersey terms the confidentiality duty corresponds to RPC 1.6 (whose exceptions have since been amended) and the withdrawal duty to RPC 1.16. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could the lawyers report the client's zoning violations?

A: No. The opinion held both the seller's and buyer's attorneys are precluded, before and after closing, from disclosing violations learned in the representation, because no DR 4-101(C) exception applied.

Q: Did the seller's attorney's municipal role change the confidentiality answer?

A: Not as to disclosure. The opinion found no law required him to disclose despite his municipal position. But it held that, because he was the municipal attorney, he should have withdrawn as the seller's attorney.

Q: How did this square with Opinion 414?

A: The Committee distinguished Opinion 414 as factually different, because there the attorney was required by law to disclose and concealment would have been tantamount to fraud and deception.

Background and rules framework

The opinion applied DR 4-101 (protection of client confidences and secrets) and its enumerated exceptions, and considered DR 7-102(B)(1). In current New Jersey terms, the confidentiality duty corresponds to RPC 1.6 and the duty to withdraw to RPC 1.16. The holding had two parts: neither attorney could disclose the violations, and the municipal attorney should have withdrawn from the conflicting private representation.

Citations and references

Rules of Professional Conduct:

• MR 1.6 / NJ RPC 1.6 (confidentiality of information)
• MR 1.16 / NJ RPC 1.16 (declining or terminating representation)
• DR 4-101, DR 4-101(C); DR 7-102(B)(1) (as in effect 1979)

Statutes:

• Hotel and Multiple Dwelling Act, N.J.S.A. 55:13A-1 et seq.

Other opinions cited:

• NJ ACPE Opinion 247, 95 N.J.L.J. 1271 (1972); Opinion 364, 100 N.J.L.J. 90 (1977); Opinion 414, 103 N.J.L.J. 17 (1979) (distinguished)

See also

• NJ ACPE Op. 431: Attorney Casino-License Applicant Disclosing the Firm's Records
• NJ ACPE Op. 451: A Board Attorney Who Resigned, Took a Private Client, Then Returned

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp439-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

104 N.J.L.J. 447, November 15, 1979

OPINION 439

Municipal and Other Attorney - Clients' Confidences in Real Estate Sale

Inquiry has been made by the attorney for the seller and by the attorney for the buyer concerning the obligation of an attorney to preserve his client's confidences and secrets in a real estate transaction. Attorney A, a municipal attorney with a private practice, in the course of representing a seller in a real estate transaction, in which the contract of sale has been executed but title has not been transferred, discovered that his client is utilizing the premises in a manner in apparent violation of the zoning ordinance in the municipality in which A is municipal attorney, and is also violating the Hotel and Multiple Dwelling Act, N.J.S.A. 55:13A-1, et seq. Attorney A advised his client to abate the violations and asked his client to apprise the municipality of the situation. Attorney A also notified attorney B, the attorney for the buyer, of the apparent violations in order to avoid any problem that might arise in connection with the closing of title. Both the seller and the buyer have agreed to take no corrective action and have decided to make no disclosure to the municipal officials.

Should attorney A or attorney B, prior or subsequent to the closing of title, disclose the apparent zoning and building violations to the appropriate officials? DR 4-101 concerning protection of confidences and secrets provide that an attorney is not permitted to disclose information which would be embarrassing or would be likely to be detrimental to a client provided such information was gained in the course of the professional relationship unless the client has consented to the disclosure, the disclosure is permitted under the Disciplinary Rules or required by law or by a court order, the disclosure is of information necessary to prevent a crime intended to be committed by the client, or the disclosure is necessary for the attorney to collect his fee or defend an accusation of wrongful conduct.

The knowledge of both attorney A and attorney B was gained in the course of their professional relationships with their clients and any disclosure by either attorney A or attorney B prior to or subsequent to the transfer of title to the premises would either be embarrassing or detrimental, or both, to their respective clients. Therefore, attorney A and attorney B are prohibited from making the disclosure unless one of the exceptions referred to above and set forth in DR 4-101(C) applies. Both clients refuse to consent to any disclosure. Neither attorney needs the disclosure in order to collect a fee or defend an accusation of wrongful conduct. The conduct of neither client would constitute the commission of a crime or the intent to commit a crime. See Opinion 247, 95 N.J.L.J. 1271 (1972). There is no court to contend with; nor based upon the facts presented is there any law which requires attorney A because of his position as municipal attorney to disclose this information acquired as a result of his representation of the seller in a real estate transaction. A fortiori, attorney B has no duty to reveal the information which was acquired by him in his professional capacity on behalf of his client. Finally, the disclosure is not permitted under the Disciplinary Rules. The only Disciplinary Rule which might arguably permit disclosure is DR 7-102(B)(1). However, under the present facts, that Disciplinary Rule does not apply. See Opinion 364, 100 N.J.L.J. 90 (1977). Therefore, none of the exceptions to DR 4-101(B) set forth in DR 4-101(C) applies to the present situation.

For these reasons, we find that both prior to and subsequent to the transfer of title, both attorney A and attorney B are precluded from disclosing the information obtained by them in the course of their professional relationships with their clients. We also are of the opinion that attorney A, because of the fact that he is the municipal attorney, upon learning of the apparent violation should have withdrawn as attorney for the seller. This result may appear to be contrary to Opinion 414, 103 N.J.L.J. 17 (1979), but that opinion is factually distinguishable because the attorney was required by law to make disclosure and any concealment of information by him would have been tantamount to fraud and deception.