Opinion ID: 1913349
Heading Depth: 2
Heading Rank: 1

Heading: Cross

Text: 3. In April 2005, Arthur Wayne Cross (Cross) met with the Respondent to discuss his significant debt problems, which had created a concern that he and his partner, John G. Smith (Smith), could lose their home to foreclosure. Cross and Smith retained the Respondent's legal services to help them address those debt problems and to provide them with legal advice and services concerning their estate planning. 4. In October 2005, the Respondent referred Cross to Lubach for the purpose of obtaining a loan. Thereafter, the Respondent performed closings for at least four loans from Lubach to Cross (the Cross Loans). The dates of these closings were on or about November 2, 2005; November 15, 2005; March 1, 2006; and August 22, 2006. 5. On or about November 2, 2005, Cross signed the closing documents prepared and/or finalized for closing by the Respondent for a loan from Lubach in the principal amount of $80,000. The note for this loan was secured by a mortgage on Cross' residential real property located in Wilmington, Delaware. 6. The Respondent's file includes a document entitled Statement of Representation and Disclosure/Arther [sic] Wayne Cross, dated November 2, 2005. Although the document includes a line with the Respondent's name and for the Respondent's signature, the document is unsigned. This document states, in part, as follows: I acknowledge that you have chosen this office to handle the above referenced loan and mortgage. Our fee in this matter is ________ to be collected from the loan proceeds.... Under the Delaware Lawyers Code of Professional Responsibility, Rule 1.16, Interpretive Guidelines Regarding Residential Real Estate Transactions, in the event that a seller, lender, real estate agent or other person having an interest in this transaction referred you to me, there are several applicable disclosures you should be aware of prior to our accepting representation of you. In this case, I referred you to a private lender, Robert Lubach. 7. The unsigned November 2, 2005, Statement of Representation and Disclosure also states as follows: 1. You have the absolute right to choose your own attorney to represent you throughout the transaction regardless of any preference a seller, real estate agent, lender or other person may have or referral they may make. 2. We are required to tell you ... whether or not we represent any other party having an interest in the transaction that could create a possible conflict of interest. Such a conflict could adversely affect the exercise of our professional judgment on your behalf in case of a dispute between the parties. A potential conflict of interest could arise as a result of our representation of the seller, the real estate agent or the lender in this transaction, or on a continuing basis in the past. In this case, we have represented Robert Lubach in this transaction and in other transactions. 3. Since we represent a lender, Robert Lubach, who in connection with this transaction will take back a promissory note and mortgage, we certify to the lender that its mortgage will be a second lien on your property and to the extent that we are meeting the other requirements of the lender before we are permitted to disburse the loan proceeds. We have and/or in the future represented the lender in that respect in other residential real estate transactions in the past. Other than the lender, we do not represent any other party other than you in this transaction. 8. The Respondent did not obtain informed consent from Cross, confirmed in writing, to represent him in connection with the November 2, 2005, loan transaction notwithstanding the Respondent's concurrent representation of the lender, Lubach. By way of further explanation, the Respondent attempted to obtain the informed written consent of Cross for the representation by preparing the unsigned Statement of Representation and Disclosure. However, the Respondent has been unable to locate a signed copy of this document. Cross would testify that he neither recalls receiving it nor does he have a copy of it in his records. 9. On or about November 15, 2005, Cross signed closing documents prepared and/or finalized for closing by the Respondent, in the aggregate principal amount of the two loans to date ($195,000). The note for this loan was secured by a mortgage on Cross' residential real property located in Wilmington, Delaware. 10. The Respondent's file includes an unsigned document entitled Statement of Representation and Disclosure/Arther [sic] Wayne Cross, dated November 15, 2005. The substance of this document is identical to the unsigned Statement of Representation and Disclosure dated November 2, 2005. 11. The Respondent did not obtain informed consent from Cross, confirmed in writing, to represent him in connection with the November 15, 2005, real estate loan transaction notwithstanding the Respondent's concurrent representation of the Lender, Lubach. By way of further explanation, the Respondent attempted to obtain the informed written consent of Cross for the representation by preparing the unsigned Statement of Representation and Disclosure. However, the Respondent has been unable to locate a signed copy of this document. Cross would testify that he neither recalls receiving this document nor does he have a copy of it in his records. 12. On or about March 1, 2006, Cross signed closing documents prepared and/or finalized for closing by the Respondent for another loan from Lubach, in the principal amount of $58,300. The note for this loan was secured by a mortgage on Cross' residential real property located in Wilmington, Delaware. 13. The Respondent did not obtain informed consent from Cross, confirmed in writing, to represent him in connection with the March 1, 2006, loan transaction notwithstanding the Respondent's concurrent representation of the lender, Lubach. By way of further explanation, the Respondent states that he attempted to obtain the informed written consent of Cross for the representation. However, the Respondent has been unable to locate either a signed or an unsigned copy of a Statement of Representation and Disclosure for the March 1, 2006, transaction. Cross would testify that he neither recalls receiving this document nor does he have a copy of it in his records. 14. On or about August 22, 2006, Cross signed closing documents prepared and/or finalized for closing by the Respondent for another loan from Lubach, in the principal amount of $68,300. The note for this loan was secured by a mortgage on Cross' residential real property located in Wilmington, Delaware. That loan and that amount included the $58,300 represented in the March 1, 2006, loan referenced in paragraph 12. 15. The Respondent's file includes an unsigned document entitled Statement of Representation and Disclosure/Arther [sic] Wayne Cross, dated September 1, 2006. The substance of this document is identical to the unsigned Statement of Representation and Disclosure dated November 2, 2005. 16. The Respondent did not obtain informed consent from Cross, confirmed in writing, to represent him in connection with the August 22, 2006, loan transaction notwithstanding the Respondent's concurrent representation of the lender, Lubach. By way of further explanation, the Respondent attempted to obtain the informed written consent of Cross for the representation by preparing the unsigned Statement of Representation and Disclosure. However, the Respondent has been unable to locate a signed copy of this document. Cross would testify that he neither recalls receiving this document nor does he have a copy of it in his records. 17. For each of the four Cross Loans, the Respondent prepared and/or finalized for closing, notes which contained payment provisionssuch as pre-payment penalties (all except the November 15, 2005, loan), balloon payments (all four loans), and prepaid payment (March 1, 2006)prohibited by federal law. [1] The Respondent does not contest that these notes unintentionally violated federal law. 18. For each of the Cross Loans, the lender failed to provide a right to rescind notice to Cross about his right to rescind the loan transaction within three days after the closing. [2] The Respondent failed to provide Cross with legal advice about his right to rescind.