Under the SRA Code of Conduct 2011, you cannot act for a client if there is a conflict of interest, or significant risk of a conflict. This is where:
- your duty to act in the best interests of two or more different clients may conflict, or
- your own interests and those of a client may conflict
There are some exceptions, which are explained in outcomes 3.6 and 3.7 of the code and in our practice note on conflict of interests.
As a conveyancing solicitor, you may be asked to act for:
- both the buyer and the seller in a property purchase
- both the borrower and the lender in the grant of a mortgage
You’ll need to consider the circumstances carefully to decide whether there is a conflict, and if so, whether you can act under the exceptions.
You should check for potential conflicts at an early stage, and do not take on the prospective client if there’s a risk. Read more on engaging clients.
Acting for a buyer and a seller
There is a high risk of a conflict of interest if you act for both a buyer and a seller. You’ll need to decide whether there is a conflict in the circumstances. If there is, then you should not act for both clients.
Chapter 3 of the SRA Code includes an indicative behaviour which states that you may not have achieved the outcomes that the code requires if you act “for a buyer (including a lessee) and seller (including a lessor) in a transaction relating to the transfer of land for value, the grant or assignment of a lease or some other interest in land for value”.
The SRA’s exception for circumstances where the two clients have a “substantially common interest” (outcome 3.6) does not apply to a property purchase. Although both clients will have a common interest in completing the sale, they also have different interests, since one is buying and one is selling.
There may be limited circumstances where it is appropriate for you to act for both parties. If you do this, you should make sure that your decision is in the best interests of both clients. You’ll also need to be able to justify your decision to the Solicitors Regulation Authority (SRA). Record your decision and your reasoning.
Read the SRA’s ethics guidance on acting for buyer and seller
Acting for a lender and a borrower
The indicative behaviours in the SRA Code suggest that you should only act for both the lender and the borrower on the grant of a mortgage if:
- the mortgage is a standard mortgage (such as one provided in the normal course of the lender’s activities, where a significant part of the lender’s activities consists of lending and the mortgage is on standard terms) of property to be used as the borrower’s private residence
- you're satisfied that it is reasonable and in the client’s best interests for you to act
- the certificate of title required by the lender is in the form approved by the Law Society and UK Finance (formerly the Council of Mortgage Lenders)
Even if these criteria apply, you should still consider each case to make sure there’s no conflict of interest.
If the property will be used as a buy to let, this will not meet the SRA’s recommendation that the property is used as the borrower’s private home.
If you’re considering acting for both lender and borrower in a buy-to-let purchase, you may want to:
- assess each case individually
- consider the risk of a conflict arising
- document your reasoning if you choose to act for both borrower and lender
- check the lender’s position on whether you should act for both parties
- have separate files for the lender and the borrower
Confidentiality and disclosure
You should think carefully about confidentiality issues when considering acting for clients who are the lender and borrower, or buyer and seller. Your duties of confidentiality and disclosure may create a conflict of interest.
Your duty of confidentiality to one client should come before your duty of disclosure to the other client.
For example, if a borrower tells you they’ve lost their job, you must keep this confidential. Since you also have a duty to disclose material information to the lender, this creates a conflict of interest, so you’d have to cease to act for the lender.
For more information see our practice note on conflict of interests.