Can One Lawyer Act for Both You and Your Mortgage Lender in Alberta?

When you buy a home in Alberta with a mortgage, you may be told that the lawyer handling your purchase will also act for your bank or other lender. That can feel odd. You are the borrower and the lender is on the other side of the loan, so it is fair to ask how one lawyer can serve both.

This article explains how that arrangement generally works under the Law Society of Alberta Code of Conduct, what the lawyer actually does for each of you, and what to ask before you agree. The exact wording of the Code should be confirmed with a lawyer before you rely on it.

This article covers the law of Alberta.

Is a lawyer required at all?

Alberta's Land Titles guidance says documents can be registered at a Land Titles office, and it only suggests getting legal advice and help when dealing with property. A lender may insist on a lawyer in its instructions, but that is a practical requirement of the loan, not a statutory one.

What the law does reserve is legal work itself. With certain exceptions, only an active member of the Law Society of Alberta can practise as a barrister or solicitor, and only lawyers can give legal advice. Title review, drafting and legal advice on a purchase are therefore reserved to Alberta lawyers, not to realtors or notaries. The listed exceptions cover articling students, Court of Justice agents and university law students, and conveyancing is not listed as an exemption.

What the Code of Conduct says about joint retainers

A joint retainer is when one lawyer acts for more than one client in the same matter. Under Rule 3.4-5, the lawyer must first get the clients' consent after explaining the advantages and disadvantages of the arrangement. The lawyer must also be satisfied the arrangement serves each client.

• The lawyer must warn that information is not confidential between the clients.
• The lawyer must warn that they may have to withdraw if a conflict cannot be resolved.
• In appropriate mortgage or loan transactions, the commentary allows a lawyer to act for both borrower and lender if both consent.
• The lawyer must disclose all information material to the transaction to both.

In practice, this means anything relevant you tell your lawyer about the purchase may have to be shared with your lender.

When a joint retainer should be declined

The Law Society's practice guidance says that where the likelihood of a conflict is high, joint retainers should not be accepted. If a conflict arises later, the lawyer may have to withdraw from acting for one or both clients. That could mean finding a new lawyer partway through, so it is worth raising any unusual features of your deal at the start.

Former clients matter too. Rule 3.4-6 bars a lawyer from acting against a former client without that client's consent. A family or business lawyer who has acted for the seller or the lender could therefore be barred from acting for you as the buyer.

What the lawyer does for you and the lender

The reason one lawyer often serves both is that the work overlaps. A purchase is completed by registering an Application for Transfer of Land (form LTS14766) at Land Titles, and a mortgage is registered on the mortgage form. The mortgage is a charge on the land that secures the loan between borrower and lender.

• Preparing the mortgage: it must be in the prescribed form or to the like effect, accurately state the interest mortgaged and describe the land sufficiently, and errors can leave the lender's security defective. Lenders commonly use a filed standard form mortgage that refers to its identifying number.
• Witnessing: an instrument signed in Alberta must be witnessed by a person who signs as witness and makes an affidavit in the prescribed form, and a lawyer's office usually arranges this. A person who is a party to the instrument cannot witness it.
• Registering quickly: priority is decided by the serial number assigned on registration, not by the date of signing, so prompt registration protects the buyer and lender. Registration, not signing alone, is what transfers or charges the interest.
• Checking title: a certificate of title is conclusive proof in all courts that the named person owns the land for the estate stated. That conclusive effect does not apply to fraud in which the owner participated or colluded, to the section 61 reservations, to claims under a prior certificate of title, or to land included by wrong description of boundaries, and a buyer can still be affected by these. A purchaser or mortgagee who made all reasonable efforts to confirm the transferor is the registered owner is protected where that owner was registered through fraud or error.

Both you and the lender depend on the same title check and the same registration, which is why the interests often line up. They do not always line up, which is why the consent and conflict rules exist.

What to do next

• Ask your lawyer in plain terms whether they will act for the lender as well as for you.
• Ask them to explain the advantages and disadvantages of that arrangement before you consent.
• Remember that information you share may not stay confidential from the lender.
• Tell the lawyer about anything unusual in your deal that could create a conflict.
• Check whether the lawyer has acted for the seller or the lender before.
• Ask what happens, and who would take over, if the lawyer must withdraw.
• Check your lender's instructions so you know whether the lawyer requirement is theirs, not the law's.

A lawyer can confirm the current wording of the Code and how it applies to your purchase.

Frequently asked questions