Professional conduct issues in property transactions Flashcards
Which of the following would NOT be an example of an “own interest conflict”?
A) Acting for a client in a property dispute when your spouse owns the neighbouring property
B) Acting for both the buyer and seller in the same transaction
C) Advising on a development project that affects the value of land you own
D) Representing a close friend in a legal dispute
B) Acting for both the buyer and seller in the same transaction
📌 Explanation: Acting for both parties in a transaction could create a conflict of interest, but it is not an “own interest conflict” (which involves the solicitor’s personal interests).
A solicitor can act in a conflict of interest situation only if:
A) The clients have a substantially common interest or are competing for the same objective, and all conditions are met
B) One client gives verbal consent
C) The solicitor discloses all confidential information to both parties
D) The solicitor believes they can manage the conflict independently
A) The clients have a substantially common interest or are competing for the same objective, and all conditions are met
📌 Explanation: The only exceptions to the conflict rule are substantially common interest (SCI) and competing for the same objective (CFSO), provided all clients give informed consent in writing and safeguards are in place.
When acting for a buyer and lender in the same transaction, what is the most likely reason this is permitted?
A) Because they both have an interest in ensuring the property is a good investment
B) Because they both need separate legal advice
C) Because the solicitor can favour the lender over the buyer
D) Because lenders do not require legal representation
A) Because they both have an interest in ensuring the property is a good investment
📌 Explanation: The buyer and lender share a common interest in ensuring the property is marketable and suitable as security for a mortgage.
What must a solicitor always do before acting on behalf of a client?
A) Ensure they have the necessary skills and experience to provide competent advice
B) Only accept instructions from the client verbally
C) Charge the client an upfront fee before taking any action
D) Give the client a full written report on title immediately
A) Ensure they have the necessary skills and experience to provide competent advice
📌 Explanation: Competence is a fundamental requirement under CCS 3.2—solicitors must ensure they have the relevant expertise before accepting instructions.
Emma, a solicitor, is instructed to act for a property developer in a new project. She later realises that the development will be built next to her brother’s family home and may affect its value.
What should Emma do?
A) Continue acting as long as she does not inform her brother
B) Immediately inform the client and withdraw from the case
C) Consider whether this creates an own interest conflict and, if so, withdraw
D) Continue acting, but notify the Land Registry
C) Consider whether this creates an own interest conflict and, if so, withdraw
📌 Explanation: If Emma’s personal connection creates a conflict of interest, she must not act under CCS 6.1.
A solicitor is instructed by two clients who regularly buy property together for investment. They want advice on a joint purchase.
Can the solicitor act for both clients?
A) No, acting for both clients is always prohibited
B) Yes, if they have a substantially common interest and all conditions are met
C) Only if the clients sign a waiver allowing conflicts of interest
D) Yes, but only if the transaction is below £500,000
B) Yes, if they have a substantially common interest and all conditions are met
📌 Explanation: Under CCS 6.2, a solicitor can act for both clients if they share a substantially common interest (SCI) and provide informed written consent.
A solicitor is acting for both a buyer and a lender in a property transaction. The buyer tells the solicitor that the purchase price is actually £150,000, but the mortgage offer states £160,000.
What should the solicitor do?
A) Disclose the discrepancy to the lender immediately
B) Do nothing and continue the transaction
C) Seek the buyer’s consent to disclose the discrepancy to the lender
D) Refuse to act for the lender, but continue acting for the buyer
C) Seek the buyer’s consent to disclose the discrepancy to the lender
📌 Explanation: The solicitor has a duty to disclose the discrepancy to the lender, but must first obtain the buyer’s consent. If the buyer refuses, the solicitor must cease acting for both.
When is it reasonable for a solicitor to act in a conflict of interest situation?
A) When all clients provide written consent, safeguards are in place, and it is reasonable to act
B) When the solicitor believes they can act fairly
C) When the clients do not know about the conflict
D) When the solicitor informs only one of the clients
A) When all clients provide written consent, safeguards are in place, and it is reasonable to act
📌 Explanation: Under CCS 6.2, conflicts may be permitted only if clients provide written consent, safeguards are in place, and it is reasonable to act.
Which of the following is not a permitted exception to the conflict of interest rule?
A) Substantially common interest
B) Competing for the same objective
C) If the solicitor believes they can remain neutral
D) All clients provide informed consent in writing
C) If the solicitor believes they can remain neutral
📌 Explanation: Personal belief is not an exception. The only exceptions are SCI and CFSO (with conditions met).
A solicitor is acting for both the buyer and the lender in a residential mortgage transaction. The buyer tells the solicitor that the purchase price is £180,000, but the lender’s mortgage offer states £190,000.
What should the solicitor do?
A) Immediately disclose the discrepancy to the lender
B) Seek the buyer’s consent to disclose the discrepancy to the lender
C) Ignore the discrepancy and proceed with completion
D) Terminate representation for both the buyer and lender
B) Seek the buyer’s consent to disclose the discrepancy to the lender
📌 Explanation: Duty of disclosure requires the solicitor to inform the lender of material information, but the solicitor must first obtain buyer consent. If the buyer refuses, the solicitor must cease acting for both parties.
