The Florida Bar

November 8, 1961

It is not improper for an attorney, who has been retained by a subdivision enterprise to handle transactions in connection with acquiring loans and mortgages, to represent the bank in foreclosure suits thereon against the subdividing enterprise when the lawyer has not represented the subdivision for some time and gained no knowledge from the representation which would be advantageous to the defense of such suits.

Canon: 6

Chairman Holcomb stated the opinion of the committee:

The Committee on Professional Ethics of The Florida Bar, upon request, has considered the matter presented to us by a member of The Florida Bar wherein he states that he is the local attorney for an approved FHA mortgage company which requires that he personally handle all closings on their loans, and that he closed about thirty of these loans in connection with a certain subdivision, which required the payment by such subdivision of all closing costs. He received the funds resulting from the loans and disbursed them, paying off various encumbrances and distributing the balance. The subdivision borrowed several large amounts of money on construction loans on the lands on which these FHA commitments were issued, which loans were made through local national banks, which required that the attorney for the FHA mortgage company issue title insurance; and with the approval of the subdivision he drew the construction mortgages, examined the titles and delivered to the bank the papers required. The subdivision paid his fees and the bank's charges and all expenses. The construction mortgages to the banks are now in default, and the banks are proceeding to foreclosure and are requesting that he handle the foreclosure suits for them.

The member desires our opinion as to whether he may handle the foreclosures of the mortgages which he originally placed on record without running into a conflict of interests. He states that he has not recently represented the subdivision and that the former officers and directors of the corporation with whom he dealt have informed him that they are no longer with the company and that he does not know any of the principals of the company or their present locations, and that he does not have any information or knowledge that would be advantageous to the defense of the suits to foreclose the construction mortgages.

With the understanding that he no longer represents the subdivision, we do not believe that this prior representation of the subdivision would bar or prohibit him from representing the banks in the foreclosure of the mortgages. However, if his representation were of a recent or of a continuing nature, our opinion would be to the contrary. Under the circumstances, we find no objection to his representing the banks in the foreclosure of the mortgages.

[Revised: 08-24-2011]