Mark Greene Law

New Phenomenon in Real Estate Practice: There is a relatively new phenomenon developing in the law of buying a new home. Well there is and it has to do with lenders and attorneys in an attempt to reduce the fees associated with buying a home…..And this is what it’s about

You see the lenders are bending over backwards to get borrowers/ buyers to borrow money from their bank in order to buy that new home. One method that the lenders (not all just some) are suggesting is this. Since there are so many lawyers working for the lenders to conduct the closing (or passing of papers as it is often referred to) the lenders are saying to these lawyers, Look if you want to continue doing closings for this lender then you must negotiate the sales agreement for the buyers/ borrowers for no fee to the buyer/borrower. Now on the surface this may seem like a great Idea for the borrower/ buyer. But the truth is ..it is not

The sales agreement forms that realtors here on the south shore regularly use is prepared by the Greater Boston Society of Realtors and it is unquestionably intended to protect the Seller not the Buyer. So if you happen to be a buyer, it is a good idea to get a lawyer to get the sales agreement fair and balanced. In other words hire someone to look out for you the buyer. Well if the lender is pressuring the lawyer to negotiate the terms of your sales agreement at no charge to the buyer/ borrower in order to continue to work for the bank…. Who then is the client of the lawyer I ask? Where is his ethical obligation? Who does the lawyer actually represent? Who is he looking out for?…great question

Now most real estate attorneys will tell you that the best interests of the buyer/borrower are not in direct conflict with the lenders best interest. And for the most part that is true, however the interests of these two parties are not the same.

So does the lawyer disclose any matters to the buyer if it may impact the decision of the buyer/ borrower to continue with the purchase? Well yes IF He is representing the buyer. Should he disclose those matter to the Lender? Sure if he represents the Lender…. But how can he do both? My opinion is that he cannot. This dual representation. to me… is a breach of ethics.

The buyer /borrower may feel that he is getting a break …but I suspect that in the end he is grasping very tightly to the short end of the proverbial stick…..