Opinion ID: 2316688
Heading Depth: 2
Heading Rank: 1

Heading: Purchase of Bartholdi Property

Text: Respondent's representation of the grievant as a buyer of the Bartholdi property was fraught with irregularities and improprieties. In 1981, allegedly for tax purposes, respondent advised Mrs. O'Connell to purchase a two-family house on Bartholdi Avenue that was owned by respondent's friend, Thaddeus Lewandowski. Lewandowski, who was not independently represented, agreed to take back a purchase money mortgage in the amount of $28,000 on the total purchase price of $44,000. According to respondent, Lewandowski had reservations about Mrs. O'Connell's ability to meet the mortgage payments. Because of those concerns, respondent drafted a rider to the contract of sale that provided that the deed and mortgage would not be recorded for thirty months. Respondent contended that this was done to allow Lewandowski to regain title to the property without necessitating a foreclosure action if Mrs. O'Connell defaulted on the mortgage. The effect of the rider was that there was no formal record of Mrs. O'Connell's ownership of the property. Although respondent claims that Mrs. O'Connell was aware of the rider, we find by clear and convincing evidence that she was never shown nor advised of the rider when she signed the contract of sale. At the time of the purchase, there was no traditional closing, nor was Mrs. O'Connell given copies of any deed, mortgage, or other closing documents. Despite the fact that respondent was aware that Lewandowski was married, he did not insist on a signature from the seller's spouse. He had no explanation of why he allowed the closing to continue without ensuring transfer of good title to his client. Indeed, no documents regarding the sale to Mrs. O'Connell were recorded until 1987. Respondent's failure to record the deed and mortgage for a period of six years, as well as his failure to insist upon the signing of the deed by Lewandowski's spouse at the time of closing, presents a clear case of gross negligence, in violation of DR 6-101(A)(1). [1] Respondent's failure to advise Mrs. O'Connell of the existence of the rider was grossly improper. By his action he admittedly attempted to protect the interests of a non-client friend over those of his own client. In so doing, respondent created a conflict of interest in violation of DR 5-105(A) and DR 7-101(A)(1) and (3).