Purchase of Client's Property at Execution Sale
Opinion rules that a lawyer may not purchase his client's property at an execution sale on his own account because of conflict of interest.
Editor's Note: This opinion was originally published as RPC 24 (Revised). For additional guidance, see Rule 1.8(a) of the Revised Rules.
Attorney A represents a client whose real or personal property is being sold by the sheriff at an execution sale. The client has instructed the attorney that, regardless of the amount of equity in the property, the client does not wish to bid on its own behalf, instead hoping that someone else will bid at the execution sale to produce partial or full payment of the outstanding judgment.
Attorney A attends the execution sale, simply to report the results to the client. At the sale it becomes apparent that there will be no bidders. Accordingly, the client will be forced to pay the expenses of the sale and the property will be returned to the judgment debtor. In such a case, Attorney A feels it would benefit the client for Attorney A to bid at the sale if he personally and individually might be interested in purchasing the property. Attorney A believes this would save the client from incurring the expenses of sale and might also produce proceeds which could be used by the client partially or wholly to satisfy the outstanding judgment.
May Attorney A ethically bid on real or personal property of his client being sold at execution sale under the circumstances set out above?
No, however it would be appropriate if Attorney A entered his bid with the informed consent of his client having first formed a reasonable belief that his personal interest would not adversely effect the representation and that the transaction would be fair to his client. See Rules 5.1(b) and 5.4(a).