By now you know the setting for this question. Robert owns a parcel which he uses for both residential and commercial purposes. The buildings have serious structural deficiencies that are not obvious to one not familiar with the property, but that Robert and his friends know very well. His circle of friends includes a real estate broker and a lawyer. Robert wants to sell the property to get away from the constant need to make repairs, and since no one told him about the deficiencies before he purchased, he sees it as only fair that his buyer also look out for himself. He says he has no intention of disclosing these deficiencies to a buyer.
In the last two articles, I asked, first, what is Robert’s duty to disclose these deficiencies? Then I asked, what is his broker’s duty?
Those of you who missed those articles can see the answers on our website.
The question now is, Robert asks his friend the lawyer to prepare a contract and close it. The lawyer knows that Robert has no intention of revealing, or permitting his lawyer to reveal, the problems with the property. Can the lawyer write the contract for Robert with those instructions and close the deal?
As you would imagine, the answer could be “yes.” When an attorney takes a client he knows that it is his ethical obligation to zealously represent his client, and that an attorney has a duty of confidentiality. The duty of confidentiality requires the attorney to say nothing to anyone about information he receives from his client, or in some cases, even who his client is. The requirement to zealously represent could lead the lawyer to do what he’s told. After all, Robert is also a friend, and if he can’t help his friend, and keep his secrets, then why would anyone need a lawyer for a friend?
Please notice that I said the lawyer could serve as Robert’s lawyer. But that’s true only in a physical sense, and frankly the word was chosen only to get your attention. The truth is, he can’t. Not by any stretch. To begin, it’s elementary law that a contract to do an illegal act is a void contract. The lawyer knows that it would be illegal under the circumstances described for Robert to fail to disclose hidden defects. The lawyer would find it difficult to explain preparing a contract he knows to be void. Furthermore, the rules of the Florida Bar require that “in representing a client, a lawyer shall not make a false statement to a third person or fail to disclose facts to a third person when necessary to avoid assisting in a criminal or fraudulent act.”
From prior articles, you know that active concealment of a known fact for the purpose of deceiving a purchaser is fraud, both by the owner and potentially the broker. Obviously, Robert’s continuous repair work on his property, coupled with his instructions not to tell, will be taken as efforts to conceal the deficiencies.
It is true that a lawyer cannot legally disclose statements made to him by a client, except in very limited circumstances. However, that privilege belongs to the client, not the lawyer. The very moment a lawsuit is filed against Robert because he failed to disclose known facts, and actively concealed facts, Robert’s response will be “what I did was legal because my lawyer knew everything and he helped me do it.” First, that response by Robert waives confidentiality. Second, it will tip off the purchaser that the seller’s lawyer should be included as a defendant in the lawsuit.
The bottom line is that the lawyer can’t write the contract or do the closing unless he discloses what he knows.
