Slouching Toward North Babylon

An experienced real estate attorney was publicly censured by the New York Appellate Division for the Second Judicial Department for his role in representing a client who purchased the home of an elderly person to whom the client was providing health care services.

The respondent was an experienced real estate practitioner who regularly represented buyers and sellers in residential real estate transactions. On or about February 23, 2007, the respondent undertook to assist Idabelle Ward in the purchase of a single-family home located in North Babylon, New York (hereinafter the North Babylon property). The respondent knew that Ward owned several properties and regularly purchased and sold real estate for investment purposes. The respondent had represented Ward’s legal interests in at least four prior real estate transactions. At all relevant times prior to February 2007, the owner of the North Babylon property was Dorothy Johnson, as surviving tenant by the entirety. On or about February 23, 2007, the respondent knew or should have known that Johnson was 80 years old and a widow, and required the assistance of a home health care aide. At the time of the closing, Ward had only recently become employed as Johnson’s home health care aide…

The facts in this case were largely uncontested. The parties, however, differed widely with regard to the respondent’s obligations, if any, to the seller. The hearing evidence revealed, inter alia, that shortly before the subject closing, the buyer approached the respondent and requested that he represent her in a real estate transaction. The buyer sought the respondent’s assistance in preparing a deed only . The parties had agreed, according to the buyer, to a sale price of $100,000. The sale price of $100,000 was below market value for such a residential home due to the agreed terms of the sale, which provided that the seller would be permitted to continue to reside in the home, and the buyer would continue to care for the seller, until the seller’s death. These terms, which were atypical, were never memorialized in any sort of writing, and no request to do so was made by the buyer or the seller. Since the buyer had already conducted a title search on the property and there were no contingencies, e.g., procurement of a mortgage, the respondent did not see a need for a contract of sale and agreed to conduct the closing. At the closing, which took place in the seller’s home (the North Babylon property), the respondent introduced himself to the seller as the buyer’s attorney. The seller, an 80-year old woman, was weak and infirm in appearance, but she otherwise appeared to be competent. The seller was not represented by counsel. The respondent oversaw the execution of the transfer documents and witnessed the exchange of a check, but did not view or examine the check. The amount of the check, as it turned out, was for $10,000 only, not $100,000, the agreed-upon sale price.

The Grievance Committee contends, as alleged in the petition, that the respondent failed to confirm or take steps to ensure that the seller received the $100,000 from the buyer, and failed to take any steps to ensure that the seller would have any recourse against the buyer in the event that, post-closing, the buyer failed to permit the seller to remain in the home and failed to continue to care for her. The respondent contends that, as the attorney for the buyer, he had no such obligations, arguing that he owed the seller a duty not to discriminate against her and not to deceive her, but that he was not required to take affirmative steps intended solely to protect the seller from his client. The respondent, however, did acknowledge at the hearing that he had “some duty . . . to ensure a legitimate transaction occurred.”

We have carefully considered the parties’ contentions and find that, under the circumstances of this case, the respondent, at a minimum, had a duty to confirm that his client tendered the agreed consideration of $100,000, to ensure that the transaction was “legitimate.” We conclude that the respondent’s failure to do so is sufficient to sustain the charge that he engaged in conduct that adversely reflects on his fitness as a lawyer. Accordingly, the Grievance Committee’s motion to disaffirm the Special Referee’s report and to sustain the charge is granted.

In determining the appropriate measure of discipline to impose, this Court takes note of the fact that the respondent has no prior disciplinary history, that he did not profit from the transaction as he earned only a nominal fee, and that the District Attorney’s Office conducted an investigation and filed no criminal charges against any party. Under the circumstances of this case, we conclude that a public censure is warranted.

(Mike Frisch)