Can an attorney use powers of attorney from both the buyer and seller to sign the closing documents in a real estate transaction?

Plain-English summary

An attorney wishing to close a real estate transaction, including a mortgage loan from a third-party lender, obtained powers of attorney from both the purchaser and the seller. The committee was asked whether the attorney could use the powers of attorney to sign all the necessary closing documents (the note, mortgage, and deed) on behalf of both the purchaser and the seller. The committee said it addressed only the ethical issues and expressed no view on the substantive legal questions raised by using a power of attorney to execute documents in a real estate transaction.

The committee observed that the purchaser, seller, and lender often have competing, if not directly conflicting, interests, yet also a unified interest in consummating the transaction. Under Rule 1.7, which governs conflicts, the interests of purchaser and seller are usually not "directly adverse" because both want the deal to close on the specified terms, so the question is whether representation of one would "materially limit" the attorney's responsibilities to the other, which depends on the responsibility the attorney undertakes for each. If the attorney is employed simply to perform the ministerial acts of closing and is neither expected nor required to render legal advice to either party, no conflict appears and Rule 1.7 is not implicated; in that situation the attorney is no different from a layman closing a deal under powers of attorney from both sides. However, if the terms are not decided, if negotiation is required, if a problem arises that might jeopardize the closing, or if either party relies on the attorney for substantive advice on how or whether to proceed, a conflict arises that implicates Rule 1.7, and the committee said it is doubtful whether such a conflict could be waived by informed consent.

Currency note

This opinion was issued in 1991, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance.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: Can a lawyer sign closing documents for both buyer and seller under powers of attorney?

A: The committee said yes if the role is purely ministerial and the lawyer gives no legal advice to either party; in that case Rule 1.7 is not implicated.

Q: When does signing for both sides become a conflict?

A: The committee said a conflict arises under Rule 1.7 if terms are unsettled, negotiation is needed, a problem threatens the closing, or either party relies on the lawyer for substantive advice.

Q: Can the parties consent to that conflict?

A: The committee said it is doubtful such a conflict could be waived by obtaining informed consent.

Background and rules framework

The opinion interprets Rule 1.7 (conflicts of interest), corresponding to Model Rule 1.7, distinguishing the rule's "directly adverse" prong from its "materially limit" prong. The committee made the analysis turn on whether the lawyer's role is ministerial or advisory, expressly leaving the substantive-law questions about powers of attorney aside.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.7 / Model Rule 1.7: conflicts of interest, addressing both directly adverse representation and material limitation of responsibilities to another client.

See also

• SC Bar Ethics Op. 91-21: Law Firm as a Title Insurance Agency
• SC Bar Ethics Op. 92-03: Lawyer as Title Insurance Agent

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-91-30/

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 91-30

An attorney wishing to close a real estate transaction, including a mortgage loan from a third party lender, obtains Powers of Attorney from both the Purchaser and Seller.

Question:
May the attorney use the Power of Attorney to sign all necessary closing documents, including the note, mortgage, and deed, on behalf of both the Purchaser and Seller?

Summary:
Provided that the attorney is employed merely to perform the ministerial act of signing the closing documents, the Rules of Professional Conduct are not implicated.

If, however, the attorney is expected or required to provide legal advice about any aspect of the transaction he must first decide whether the circumstances of the transaction will adversely affect his ability to carry out his representation of both the Purchaser and Seller. If he can adequately represent both parties under the circumstances, he must then explain the nature and effect of the dual representation and obtain the consent of both parties to the dual representation.

Opinion:
At the outset it must be noted that this opinion addresses only the ethical issues implicated by the Facts and Question, and is not intended to express any opinion about the substantive legal issues raised by the use of a power of attorney to execute documents in a real estate transaction.

It is clear that in real estate transactions the Purchaser, Seller, and Lender often have competing, if not directly conflicting, interests. Each party has a need for legal advice about the nature of the transaction and the legal relationships it will create and effect. Yet it is also clear that the parties have a unified interest in consummation of the transaction.

Rule 1.7 of the Rules of Professional Conduct governs conflicts of interest. It addresses two distinct situations: (a) where an attorney seeks to represent clients whose interest are "directly adverse," and (b) where an attorney seeks to represent a client whose interests may "materially limit" the attorney's responsibility to other clients.

The interest of the Purchaser and Seller are usually not "directly adverse." Both have an interest in seeing that the transaction closes on the specified terms. Moreover, whether representation of the Purchaser may "materially limit" the attorney's responsibilities to the Seller, and vice versa, depends entirely upon the nature of the responsibility which the attorney undertakes for each.

If the attorney is employed simply for the purpose of performing the ministerial acts associated with "closing the deal," and he is neither expected nor required to render legal advice to either party in connection with the transaction, no conflict of interest appears and Rule 1.7 does not appear to be implicated. In this situation the attorney would be no different from a layman who closes a deal using powers of attorney from both sides.

However, if the terms of the deal are not decided, if any negotiation is required, if any problem arises which might jeopardize the closing, or if either party to the sale is relying on the attorney for substantive advice about how or whether to proceed, a conflict of interest arises which would implicate Rule 1.7. It is doubtful whether such a conflict could be waived by obtaining informed consent.