I purchased a home a couple of years ago and I have now decided to sell and move in with my girlfriend. I am trying to deal with my bank to reduce the pre-payment penalty they want to charge me for getting out of the mortgage early. I have approached my lawyer who acted on my behalf when I purchased the property and have discovered to my surprise that he cannot assist me because he is claiming conflict of interest. Apparently he represented both me and the bank when I purchased the property and therefore cannot give me any legal advice with respect to the bank. Is this true and what should I do?

There a variety of situations where your lawyer may find themselves in a conflict of interest situation and one of the most common is with the bank which holds your mortgage. In most situations, your lawyer who acts on your behalf will also represent the bank’s interests in your transaction.

It makes perfect sense; they have done the work investigating the title to the property and therefore can give to both you and the bank, who want to make sure their loan collateral is not compromised, an opinion that the title is free and clear of any defects.

In this case, when I sit down with a client, I explain this potential for conflict and actually make my clients sign an acknowledgement that we have had this discussion and they understand the implications.

If you require legal representation to deal with the bank that holds your mortgage, more than likely your lawyer who acted on your behalf when you purchased will be precluded from assisting you with your bank negotiations. A new lawyer is the only real alternative.

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