June 12, 1981
Upon obtaining the client's consent after full disclosure on the potential for conflict of interest, an attorney/real estate broker may list and sell the client's real property for a commission.
An attorney who operates a real estate brokerage business and law office from the same building shall maintain the use of separate entrances and reception areas.
References: DR 5-104(A); CI-221.
You state that you have obtained a real estate broker's license and propose to practice law and real estate brokerage simultaneously. Your plan is to operate the real estate business out of your existing law offices. You indicate that the physical layout of your office would allow for separate entrances and reception areas. You have requested an opinion concerning:
- The dual use of a main entrance and reception area.
- The propriety of listing and selling, for a commission, real property in an estate of which you are the attorney for the fiduciary.
- The propriety of listing and selling, for a commission, marital real property under circumstances where you represent one of the parties to a divorce action.
- The propriety of listing and selling real property for a commission in litigation other than divorce or estate matters.
You state that you would undertake none of the proposed activities without a full written disclosure to and consent from all parties concerned.
First, with reference to your inquiry regarding the dual use of a main entrance and reception area, this would be ethically improper. The impropriety stems from the resulting intermingling of customers and clients that would appear to be inevitable in a situation where one main entrance and reception area is used for both the real estate brokerage business and the law practice.
As pointed out in American Bar Association Informal Opinion 1170, and cited in CI-221:
"What is desired is that the two operations be kept so distinct that there can be no suspicion that one is serving as a feeder for the other, or that potential clients arrive in the law office in response to advertisements directed to real estate prospects."
Compliance with the prior opinions of this Committee would require you to maintain separate entrances and reception areas so that persons coming to your office on real estate business do not find themselves in the same waiting area as your law clients.
On the subject of your inquiries on the listing and sale of real property (for a commission) for your clients, you are referred to DR 5-104(A) that states:
"A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his or her professional judgment therein for the protection of the client, unless the client has consented after full disclosure." Emphasis added.
Your inquire indicates your awareness of the fact that full disclosure and client consent is necessary in situations where an attorney enters into a business transaction with a client. DR 5-104(A) would appear to sanction the activity about which you have inquired where there is a full disclosure and client consent prior to entering into the business transaction. By obtaining the client's consent after dutifully informing the client of the potential conflict of interest, you will have satisfied DR 5-104(A) and, thereafter, you may proceed with the listing and sale of the property for a commission.