LEO: Fees: Attorney - Substitute Trustee  LE Op. 1277


Fees: Attorney - Substitute Trustee Imposing Charges on Purchaser

at Foreclosure Sale.


September 21, 1989


You advised that Attorney A was contacted by the beneficiary of a note

secured by a deed of trust, was appointed substitute trustee and directed

to foreclose on the real property. Attorney A ran an advertisement which

stated in part:


All costs of conveyance, which shall be by special warranty deed,

including examination of the title, recording charges, notary fees and

settlement fees, including preparation of the deed and grantor's tax

thereon shall be at the cost of purchaser.


At foreclosure, Purchaser X retained Attorney B to search the title and

obtain title insurance, complete the mortgage financing package and close

the matter. When Attorney B called Attorney A to confirm figures required

to close, Attorney A informed him that, in addition, $125 for a title

examination requested prior to foreclosure by Attorney A and $250 for

Attorney A's settlement fee would also be charged to the purchaser. You

wish to know if it is ethically permissible for Attorney A to charge

purchaser at foreclosure a fee for a title examination incurred by

Attorney A in order to conduct the foreclosure sale and to charge a

settlement fee when requested to deliver a deed.


The appropriate and controlling rule relative to your inquiry is DR:2-

105(A) which provides that a lawyer's fees shall be reasonable and

adequately explained to the client.


The Committee is of the view that the advertisement as stated adequately

explains the costs to be charged by the purchaser at foreclosure and

obligates the purchaser to pay costs related to the conveyance or

foreclosure sale such as the title examination fee imposed by Attorney A.

Likewise, if Attorney A's settlement fee is related solely to the drafting

of the special warranty deed, then under the terms and conditions of the

foreclosure sale, as reflected in the advertisement, the Committee opines

that the purchaser would also be responsible for the payment of Attorney

A's settlement charges. The Committee recognizes that Purchaser X is

entitled to retain independent legal counsel if he chooses. However, even

though Purchaser X has retained the legal services of Attorney B as

settlement attorney, Purchaser X has been advised in advance of fees

assessed to the purchaser by Attorney A as a condition of the sale, and

may properly be held accountable for those charges specifically stated in

the advertisement. (See LE Op. 878, LE Op. 922, LE Op. 1204)


The Committee is of the opinion that the question of whether Attorney

A/substitute trustee is permitted by law to assess charges or expenses to

the purchaser in addition to the statutorily authorized trustee's

commission constitutes a legal question beyond the purview of the

Committee's authority. The Committee is not opining as to whether the

controlling statute permits or precludes legal fees payable to an attorney

who is also serving as a trustee to be charged to the purchaser in a

trustee's sale.


Committee Opinion September 21, 1989