The Real Estate Lawyer's Duties: Defining the Duty with Reference to Elements of Proximity and Reliance

• Author: Andrew A. Sanfilippo
• Profession: O'Donnell, Robertson & Sanfilippo
• Pages: 447-501

Andrew

A.

Sanfilippo

The

jurisprudence that defines

and

characterizes

the

duties owed

by

solicitors

to

their clients

has

found

fertile

ground

in

assessing

the

dis-

charge

of

duties

by

lawyers practising real estate law. This

is not

because

real

estate lawyers

are

necessarily more prone

to

complaint

by

clients

than practitioners

of

other areas

of

law,

although

in

recessionary eco-

nomic

times they

may be

made

to

feel

like handy targets.

Instead,

the

prominence

of the

real estate lawyer

in the

wealth

of

case authority

assessing duties owed

by

lawyers

to

their clients

is

likely

a

direct

reflec-

tion

of the

integral role played throughout time

by the

real estate lawyer.

An

analysis

of the

early case

law

evidences that

the

desire

to

divide

and to own the

land

was a

major

component

of

commerce and, accord-

ingly,

formed

a

significant portion

of the

workload

of the

practising bar.

The

volume

of

transactions conducted

in the

area

of

real estate

law has

uniformly

outweighed

the

quantity

of

retainers involving

any

other

practice area

because

of the

public's

need

for

legal assistance

in its

deal-

ings with

the

land. Professor Robert Robson noted this

in his

treatise,

The

Attorney

in

Eighteenth-Century

England:

What

was

true

in

this

matter

in the

nineteenth

century

was at

least

equally

true

in the

eighteenth,

before

the

specialization

of

activities

Of

O'Donnell,

Robertson

&

Sanfilippo.

The

author wishes

to

acknowledge

the

assistance

of

Debra

Rolph,

David

Jose,

and

Jennifer

Guy

with

the

development

and

preparation

of

this paper.

447

Elements

of

Proximity

and

Reliance

Defining

the

Duty with Reference

to

The

Real Estate

Lawyer's

Duties:

448

Andrew

A.

Sanfilippo

which resulted

in the

development

of

many distinct professions.

It was

certainly

true that

the

part

of the

attorney's business which involved

him in

court cases

was a

small part

of his

normal activities.

A

very

much larger part

of his

time

was

spent

in

organisation

and

administra-

tion

in

many

different

capacities

and

perhaps

the

greatest single source

of

business

and

profit

was his

concern with landed property,

and all the

problems

it

involved.

It was

from

their work

in

these important

fields

that

the

attorneys derived much

of

their

profit

and

their

prestige.1

The

other

factor

that

has

remained historically consistent

is the

com-

plex nature

of the

tasks pertaining

to

dealings with

the

land. Professor

Robson's

comment

on

eighteenth-century real estate

law

seems equally

pertinent today:

The

laws regulating tenures

and

inheritances were many

and

compli-

cated,

the

subject

of

innumerable treatises

and

hand-books,

and the

source,

it was

alleged

by

landowners,

of

much unwarranted

profit

to

lawyers.

The

buying

and

selling

of

even

the

smallest estate might

involve complicated legal problems, prolonged investigations

of the

title

deeds,

and the

drawing

of

long

and

intricate conveyancing

deeds.2

The

real estate lawyer

has

historically been

the

analyst

and

adviser

of

the

risk,

the

facilitator

of the

transfer,

the

certifier

of the

title,

and the

trustee

of the

proceeds

of the

transaction.

Is it

surprising,

in

this

context,

that

the

lawyer

is the

prime target when

the

real estate transaction does

not

meet clients' expectations?

In the

event

of

dissatisfaction

in the

outcome

of the

real estate trans-

action,

the

real estate lawyers' discharge

of

their retainer will

be

scruti-

nized

by

reference

to

three principal areas: breach

of

contract,

negligence,

and

breach

of

fiduciary

duty.

A

solid understanding

of

these three areas

is

critical

to

recognizing

the

duty owed

by the

real estate lawyer

to his or

her

client.

An

analysis

of the

elements that give rise

to

these three causes

of

action

is

essential

to

identifying

future

developments

or

prospective

expansion

in the

liability exposure

of

real estate lawyers

to

their clients.

The

duties owed

by

real estate lawyers

in

contract, negligence,

and

as

fiduciaries

may be

traced

to two

fundamental elements that

are

promi-

nent

in

most,

if not all

instances

of

solicitor's liability: proximity

and

reliance. Proximity gauges

the

extent

to

which

the

lawyer

is

connected

to

1 R.

Robson,

The

Attorney

in

Eighteenth-Century

England

(London:

Cambridge

U.P., 1959)

at 84.

2

Ibid.,

citing

Sir

Frederick Pollock,

The

Land

Laws,

3d ed.

(London:

Macmillan,

1896).

The

Real Estate Lawyer's

Duties

449

the

parties

or to the

transaction

in

which

the

parties

are

involved,

and is

assessed

by

reference

to

relationships between

the

lawyer,

the

parties,

and the

transaction.

The

element

of

reliance

is

manifested

by

dependence

and,

in the

case

of

fiduciary obligations, trust

and

resultant vulnerability.

It

is

essential

to

analyze whether

the

client's reliance

was

known

to the

lawyer,

or was

reasonably capable

of

being understood.

When

the

elements

of

proximity

and

reliance

are

established, there

is a

good likelihood that

a

duty

may be

identified.

I.

THE

DUTY

IN

CONTRACT

1)

The

Formation

of the

Contract

The

contract

of

retainer between

the

lawyer

and his or her

client

is the

most overt

and

tangible manifestation

of

solicitor

and

client duty.

The

contractual duty

may be

simply summarized

as

follows:

A.

Contractual

Obligations

When

a

solicitor

is

instructed

by a

client

the

retainer that arises

is a

con-

tract

from

which

originate both

express

and

implied

contractual

obli-

gations.

Express

terms

would

include,

but not

necessarily

be

limited

to

executing

the

legal transaction

for

which

the

lawyer

was

instructed.3

In the

case

of

retainers pertaining

to

real estate law,

a

written

form

of

retainer agreement

is

rarely utilized.

In the

majority

of

instances,

the

contract

of

retainer

is

discernible

from

materials transmitted

to the

real

estate

lawyer

to

initiate

the

file

handling:

such

as an

agreement

of

pur-

chase

and

sale,

solicitor's

instructions

in a

lending transaction,

or

even

directions

or

authorizations concerning

the

handling

of the

transaction.

In the

absence

of

written documentation

of the

existence

of a

solici-

tor and

client retainer,

the

formulation

of the

retainer

can

often

be

estab-

lished through

the

conduct

of the

real estate lawyer. Where

the

lawyer

acts

as

though

he or she is

retained,

he or she

will likely

be

found

to

have

been retained. Hence,

the

opening

of a

file

or the

transmission

of

mate-

rials

to

third parties consistent with

file

handling will

be

supportive

of

the

finding

of a

contract

of

retainer.

Similarly, omitting

to

take

steps

may

illustrate

the

establishment

of a

contract

of

retainer. Examples

of

this

are

Woodglen

&

Co. v.

Owens

(1999),

27

R.P.R.

(3d)

327

(Ont.

C.A.), citing

Garden/

on

Solicitors

(London:

Butterworths,

1995)

at

J101-J102.

3