10 steps to avoid conflict of interest
The Guidance and Ethics Committee has outlined ways in which practising solicitors can avoid conflict of interest in regards to property transactions.
Guidance and Ethics 30/04/2019- SI No 375 of 2012, Solicitors (Professional Practice, Conduct and Discipline – Conveyancing Conflict of Interest) Regulations 2012 prohibit a solicitor acting for both Vendor and Purchaser (with limited exceptions) from 1 January 2013.
- The Regulations supersede SI No 85 of 1997 which prohibited acting for both builder/developer and purchaser of a newly built property.
- There are four exceptions to the Regulations:
- Voluntary transfers of the family/shared home from the owning spouse/civil partner into the names of both as joint tenants or where held otherwise than as joint tenants from the owner to themselves as joint tenants;
- Where vendor and purchaser are associated companies within the meaning of the legislation or where one of the parties being an individual and the other a company in which the parties are associated. (See the Regulations for definitions);
- Where the property being transferred is held under a bare trust by existing trustees and is being transferred to new trustees or by trustees to a beneficiary;
- The “qualified parties exception” as set out in the Regulations is unlikely to be met by other than the largest firms acting for large organisations.
- Property is defined as any interest in land situate in Ireland.
- The Regulations apply to the transfer of any property (defined as any interest in land situate in Ireland) whether by sale, lease, voluntary transfer, conveyance, licence, assignment, surrender or grant of an easement or otherwise.
- Always be alert to the risk of conflict of interest and note breach of the Regulations may be regarded as professional misconduct.
- Where the other party wishes to represent themselves it is prudent for the acting solicitor to write to the non-represented party clearly setting out that they are not acting as the solicitor for that person.
- Conflict of interest can arise in the sale/disposal of a property where there are co-owners, most likely following a court order. Consideration should be given to agreeing joint carriage of sale. See Conveyancing Committee Practice Note from November 1999 which adopts the DSBA 1996 Practice Note, re disposal of property in family matters.
- The Multi-Unit Developments Act 2011 Section (3)(6) prohibits a solicitor from acting for both the owner’s management company and the developer in the transfer of common areas. The developer or other person who is the owner of the common areas concerned is legally obliged to pay the reasonable costs of independent legal representation of the owner’s management company.
