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NO. PR 99-03

IN RE: RUSSELL Z. GOLDBERG

SUMMARY


On May 16, 1994, the respondent was settlement agent and attorney for a lender in connection with a loan refinance transaction secured by residential real estate. The borrowers were husband and wife who resided at the property. Prior to the closing, title was held as tenants in common by the wife and her brother. Since the loan application was in the name of the borrowers only, the lender required, as a condition of the loan, that the brother transfer his interest in the property to the borrowers.

At the closing and in order to close the loan, the respondent asked the brother to execute a quitclaim deed that the respondent had prepared. After being informed of the need to transfer his title in the property, the brother requested that the respondent draft an agreement that acknowledged that he was executing the deed as an accommodation to the borrowers and that he still held a half interest in the property. The brother's intent was not to relinquish his half interest in the property, subject to the new loan, but to continue to hold it for the benefit of his two sons.

At the brotherís request, the respondent drafted an agreement which purported to acknowledge that the deed was being executed as an accommodation and that execution of the deed was not intended as a termination of the brother's equitable interest in the property. The agreement also provided that the borrowers would reconvey the brother's interest in the property to him upon request. The parties were given opportunity to review the draft of the agreement before execution and to ask questions. No one asked questions or made any requests for changes to the agreement that the respondent had drafted. The agreement was executed and the respondent acknowledged the signatures.

After the closing, the borrowers ignored the brotherís requests to convey back his interest to him and instead, and without the brother's knowledge, used the property as collateral for a second mortgage. Thereafter, the brother retained counsel who advised him to record the agreement. However, the property was subsequently foreclosed upon with no recovery to the brother.

With respect to the drafting and the execution of the agreement, the respondent was attorney for the transaction, and in that limited role, the brother relied upon the respondent. The brother did not receive the zealous representation that he would have received if represented by independent counsel. At no time prior to execution of the agreement was the brother advised of the legal significance of the agreement or whether it accomplished his goals, of the advantages of retaining independent counsel, or of the differing interests of the parties with respect to the agreement. In particular, the brother was not told that he should record the agreement and was not informed that the agreement would not be enforceable against third parties without knowledge of it unless recorded in the registry of deeds such that the borrowers could alienate the property or use it as collateral for additional loans.

The respondent represented multiple parties with differing interests in circumstances where it was not obvious that he could adequately represent the interest of each, in violation of Canon Five, Disciplinary Rule 5-105(A), (B) and (C). In so doing, the respondent failed to represent the brother zealously, in violation of Canon Seven, Disciplinary Rule 7-101(A)(1) and (3).

The matter came before the Board of Bar Overseers on a stipulation of facts and disciplinary violations and a joint recommendation for discipline by public reprimand. The Board accepted the partiesí recommendation and imposed a public reprimand on April 12, 1999.



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