Can a firm that handled a client's home purchase later represent the homeowners' association in placing a lien on that same home for unpaid dues?

Plain-English summary

A law firm represented a buyer in the 1998 purchase of a home in a subdivision with a homeowners' association, and had done nothing for the buyer since closing. The firm now represents the association, which asked the firm to place a lien on the buyer's house for unpaid dues. The question was whether the firm's former representation of the buyer precludes it from filing the lien.

The committee concluded the firm may not file the lien unless the former client consents after consultation. It applied Rule 1.9(a): a lawyer who formerly represented a client in a matter may not later represent another person in the same or a substantially related matter where that person's interests are materially adverse to the former client's, absent the former client's consent. The opinion quotes the Rule 1.9 comment that "[w]hen a lawyer has been directly involved in a specific transaction subsequent representation of another client with materially adverse interests is clearly prohibited."

The committee found filing the lien would place the lawyer in a position contrary to a former client in a substantially related matter, because enforcement of the association's rights would necessarily look into the closing documents addressed for the former client and could compromise the client's use and enjoyment of the home. It analogized to its prior opinions holding a loan transaction and a later foreclosure of that loan substantially related (Opinions 84-24 and 90-22), quoting Opinion 90-22 that pursuing a foreclosure against a former closing client would take a position adverse to a former client in a substantially related matter and breach loyalty.

The opinion stresses the depth of the loyalty owed when a lawyer helps a client acquire a home, and concludes that even if filing a lien is viewed as a ministerial act, it creates a cloud on title and is inconsistent with the former client's interests. The only way to handle the lien filing would be to obtain the former client's consent after consultation.

In practice

Under this opinion, a firm that handled a client's home purchase was disqualified under Rule 1.9(a) from later filing a lien on that home for a homeowners' association, absent the former client's consent after consultation, because the matters are substantially related and the firm's position would be materially adverse. The committee treated the closing and the later lien like a loan and its foreclosure (its Opinions 84-24 and 90-22), and found the ministerial character of a lien filing did not change the result because it clouds title and is inconsistent with the former client's interests.

Common questions

Q: We closed a client's home years ago. Can we now lien that home for the HOA?

A: Not without the former client's consent. The committee held the closing and the lien are substantially related and the firm's interests would be materially adverse, so Rule 1.9(a) bars it.

Q: Does it matter that we have not done anything for the buyer since closing?

A: No. The committee applied Rule 1.9(a) to the former representation regardless of inactivity since closing, focusing on the substantial relationship between the matters.

Q: Filing a lien is just ministerial. Does that exempt it?

A: No. The opinion says even a ministerial lien filing creates a cloud on title and is action inconsistent with the former client's interests in a substantially related matter.

Q: Is there any way to take the lien matter?

A: Only by obtaining the former client's consent after consultation, as Rule 1.9(a) provides.

Background and rules framework

The opinion applies South Carolina's version of Model Rule 1.9(a) (duties to former clients), which bars later representation in the same or a substantially related matter where interests are materially adverse, absent the former client's consent. It relies on the Rule 1.9 comment and on prior SC Ethics Advisory Opinions 84-24 and 90-22 treating a loan closing and a later foreclosure as substantially related.

Citations and references

Rules of Professional Conduct:

• MR 1.9 / SC Rule 1.9(a) (duties to former clients; substantially related matters)

Other opinions cited:

• SC Ethics Advisory Opinion 84-24 (loan transaction and later foreclosure substantially related)
• SC Ethics Advisory Opinion 90-22 (foreclosure against a former closing client adverse in a substantially related matter)

See also

• ABA Formal Op. 497: Conflicts involving materially adverse interests
• SC Bar Ethics Op. 04-10: Imputed conflict when an associate helped plan the opposing claim

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-05-05/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 05-05

RULE 1.9(a)

Facts
Law firm has represented buyer in purchase of home in 1998 in subdivision of homeowners association. Law firm now represents homeowners’ association itself and has done nothing on behalf of buyers since closing. Homeowner’s association has asked law firm to place lien on house for dues owed by buyer.

Question
Does law firm’s former representation of buyer in purchase of house preclude it from representing homeowner’s association in filing lien?

Summary
Law firm may not represent homeowner’s association in filing lien, unless the former client consents after consultation.

Opinion
Rule 1.9(a) states: A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interest are materially adverse to the interest of the former client unless the former client consents after consultation. Rule 1.9(a). The comments to Rule 1.9 state, “When a lawyer has been directly involved in a specific transaction subsequent representation of another client with materially adverse interests is clearly prohibited.”

To undertake filing the lien for the homeowner’s association would contravene Rule 1.9. To file a lien on a former client’s home would be to place the lawyer in a position contrary to a former client in a substantially related matter. Enforcement of the homeowner’s association’s rights would necessarily delve into the critical documents addressed at the closing for the former client and could also seriously compromise the client’s use and enjoyment of his home.

It has already been opined by this Committee that a loan transaction and a subsequent foreclosure of that loan are substantially related. SC Bar Advisory Opinions 84-24 and 90-22. As we stated in Opinion 90-22: Representing the client at a closing necessitates a review of the loan documents and advice to a client as to his responsibilities and liabilities thereunder. For a lawyer later to pursue the foreclosure against the client would be taking a position adverse to a former client in a substantially related matter and would also be a violation of loyalty. Ethics Advisory Opinion 90-22 is persuasive in this case. Similar facts obtain here and a comparable analysis leads to disqualification of the firm. See S.C. Bar Advisory Opinions 84-24 and 90-22.

One of the signal events in a client’s life is the purchase of a home. A lawyer representing a client purchasing a home finds herself in the role of helping a client acquire a valuable and enduring possession. The expected duty of loyalty is profound. For a lawyer to ultimately take a position endangering home ownership when that lawyer had previously used his or her best efforts to help the client obtain a home would be an expression of hostility to a former client in violation of Rule 1.9 and a breach of the corresponding duty of loyalty owed to that former client. Even if the filing of a lien is seen only as a ministerial act, it creates a cloud on the title and represents action inconsistent with the interests of the former client in a substantially related matter.

The only way that the lawyer could handle the lien filing would be to obtain the consent of the former client after consultation. Rule 1.9(a).