The Two-Lawyer Requirement in Transfers of Title to Real Property
An individual lawyer cannot act for or otherwise represent both the transferor and the transferee in a transfer of title to real property except in certain limited circumstances set out in r. 2.04.1(3) of the Rules of Professional Conduct (the Rules). If one of these exceptions applies and the lawyer complies with r. 2.04 on conflicts of interest, including the joint retainer provisions (rr. 2.04(6)-(10)), then an individual lawyer may act for both parties.
For mortgage or loan transactions, a lawyer or two or more lawyers who are practising in partnership or association cannot represent both the borrower and the lender (r. 2.04(11)) unless one of the exceptions in r. 2.04(12) applies and the lawyer complies (or lawyers comply) with r. 2.04.
For transfers of title to real property, even if none of the exceptions apply, the two-lawyer rule does permit different lawyers in one firm to act in the transfer: one for the transferor and the other for the transferee (r. 2.04.1(2)). In such cases, the lawyers must still ensure that there is no conflict of interest that would preclude them from accepting the retainer. It is important to note, however, that there is no equivalent provision that permits lawyers at the same law firm to act for both the borrower and the lender in mortgage or loan transactions if an exception does not apply.
Where the lawyers representing the transferor and the transferee in the transfer of title to real property are at the same law firm, the retainer is a joint retainer and the lawyers must comply with the joint retainer requirements of the Rules (rr. 2.04(6)-(10)). The commentary to the joint retainer rules cautions lawyers that although all of the parties concerned may consent to the joint retainer, a lawyer should avoid acting for more than one client when it is likely that a contentious issue between the clients will arise or their interests, rights, or obligations will diverge as the matter progresses. The following are examples of situations where it would not be prudent for a lawyer or lawyers at the same firm to act on both sides of the transaction:
- the transferor and transferee are spouses of one another who are involved in a matrimonial dispute and are not separately represented in the matrimonial dispute, or
- the parties have not agreed on the terms of the transaction.
The following are examples where a lawyer or lawyers in the same firm should consider either not acting for both sides in the transaction or having the more vulnerable party in the transaction obtain independent legal advice on the transaction:
- one of the parties to the transaction is receiving a greater benefit than the other party to the transaction, or
- the transferor and the transferee are related parties and one of the parties is more vulnerable than the other party.
Although the Rules permit lawyers in the same firm or an individual lawyer in certain circumstances to represent both the transferor and transferee in a real estate transaction, lawyers should use care when accepting such retainers. The probability of a conflict of interest arising between a vendor and purchaser of real property is high. The interests of each of these clients might differ and the advice that the lawyer would give to each client might not be the same, and may even be conflicting. Where there is a pre-existing relationship between the lawyer and one of these clients, there is a risk that the lawyer might prefer the interests of that one client to the other. Finally, conflicts often arise unexpectedly. If a conflict between the parties were to arise on the date of closing, there might be insufficient time for each of the parties to retain separate lawyers and their rights might be prejudiced.
REMINDER - Disclosure of Information about Trust Accounts to CDIC Member Institutions If you have a trust account at a bank or trust company which is a member of the Canada Deposit Insurance Corporation (CDIC), your bank or trust company will be sending you a reminder during the month of April to provide information about the beneficiaries of your trust account(s) and amounts being held in trust for each beneficiary. This information is required pursuant to Section 3 of the Schedule to the Canada Deposit Insurance Corporation Act so that trust deposits may enjoy additional insurance coverage. Read more.
2013 Annual Report due March 31 and must be e-filed through the LSUC Portal. Lawyers and paralegals who fail to file their annual report by May 30, 2014 will be charged a $100 late fee and be subject to administrative suspension. Questions about the annual report should be directed to email@example.com or by calling By-Law Administration Services at 416-947-3315 or 1-800-668-7380, ext 3315. Questions about registering for the LSUC Portal should be directed to Portal Support by calling 416-947-3456 or
1-800-668-7380, ext 3456.
New Framework to Prioritize Access to Justice A new framework, approved at February Convocation, will enable the Law Society to take on an enhanced role in facilitating access to justice. The new framework has two key components:
- Focused internal resources to fully integrate access to justice objectives, including equity principles, into the Law Society's core business functions: professional regulation and competence.
- Dedicated infrastructure to support an external collaborative forum - The Action Group on Access to Justice - to foster change and collaboration.
March 31 - 2013 Annual Reports are due and must be e-filed through the LSUC Portal
April 10 - Special Convocation
April 24 - Convocation
April 30 - LAWPRO 2014 Real Estate and Civil Litigation Levy Surcharge annual exemption form due.
April 30 - LAWPRO 2014 First Quarter Real Estate and Civil Litigation Levy Surcharge filings and applicable payments due.
May 7 - Law Society Annual General Meeting
For more information, visit the Manage Your Practice section under For Lawyers or phone 416-947-3315 or 1-800-668-7380 ext 3315.
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