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Professional Conduct Issues Notes

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Professional Conduct Issues Lenders & Draft Certificates of Title A certificate of title will be sent to the lender's solicitors before the contracts are exchanged to ensure the lender has the appropriate funds to discharge the mortgage. On completion the signed and dated certificate will be sent to the lender's solicitor.

Acting for Lender & Borrower If a borrower requests their solicitor to act for both the lender and the borrower this creates a professional conduct issue. Under P(4) the solicitor is under a duty to act in the best interests of each client. O(3.5) clearly states that a solicitor should not act where there is an actual or risk of a client conflict unless one of the exceptions in O(3.6) or O(3.7) applies. The Glossary defines 'client conflict' as where the duty to act in the best interests of each individual client conflicts. In this case there is a potential conflict because…
IB(3.7) clearly applies here and states that acting for a lender and borrower can only achieve the outcomes where there is a standard mortgage for a private residence. In this case it is not a private residence and therefore IB(3.7) does not apply…
There are two exceptions to O(3.5), the first of which is O(3.6) which states that a solicitor may act where there is a client conflict when the clients have a substantially common interest. The Glossary defines 'substantial common interest' as where the parties have a clear consensus as to how a common purpose is to be achieved. However, in lender-borrower cases O(3.6) almost never applies because IB(3.11) states that where clients interests in the end result are not the same, the solicitor cannot act. In this case… Merely wanting to complete the deal is not a valid 'substantial common interest'. The second exception to O(3.5), is O(3.7) which allows solicitors to act for clients if the clients are competing for the same objective if they have confirmed in writing they want the solicitor to act. The Glossary defines 'competing for the same objective' as where one party attains the objective (being an asset, contract or business opportunity) it becomes unattainable to the other party. In this case…
Finally, IB(3.3) states that solicitors should decline to act where the solicitor will need to negotiate on matters of substance on their clients behalf. In this instance, there will be a variety of issues of substance (such as the loan agreement or mortgage) that the solicitor will need to negotiate on and clearly a negotiation cannot be conducted by one sole solicitor.

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