Code of Practice
Chapter 13. Conflicts of Interest
Practice Rule 9.1 sets out the general principle that in the conduct of his or her practice a notary shall not favour the interests of one client over those of another and shall not favour his or her own interests or those of any other person over those of his clients.
Practice Rule 9.4 relates to conflicts of interest in the context of notarial services that are not conveyancing transactions.
Practice Rule 9.4.2 is clear – “a notary does not act for both parties to a transaction merely by preparing or authenticating a notarial act in his capacity as a public certifying officer even though that act may concern two or more parties”. A notary may therefore authenticate an instrument transferring title of an asset signed by both buyer and seller.
For a syndicated loan transaction a notary may act for more than one lender without the need to obtain consent in writing from each party involved. Practice Rule 9.4.2 covers the majority of the day-to-day notarial work a notary will deal with, but not conveyancing matters.
Where the notary does act for two or more parties to a transaction, for example by advising both purchaser and seller of a ship, then in all cases save for conveyancing matters the notary may act for both parties to the transaction if:
- each party has consented in writing to the notary so acting; and
- the notary is satisfied that there is no conflict of interest between the parties.
Practice Rule 9.2.1 provides that if a notary is conducting a conveyancing transaction in his or her capacity as a solicitor, or a licensed conveyancer, or member of another professional body with an approved regulator for reserved instrument activities then he or she will be subject to the rules and any guidance relating to (a) conflicts of interest and (b) relations with third parties laid down by the approved regulator of that professional body, and should comply with such rules and have regard to any such guidance accordingly.
Practice Rule 9.2.2 applies when a notary is conducting a conveyancing transaction as a notary. The rule is specific and prevents the notary from acting for both seller and buyer in a transaction relating to property situated in England and Wales unless:
- the notary is satisfied that no conflict of interest exists or is likely to arise during the course of the transaction, whether or not the transaction is between parties at arm’s length; and
- both parties are established clients in that they have instructed the notary on previous occasions; or
- the consideration does not exceed £10,000 in an individual transaction; and
- both clients are informed of the advantages of separate representation before they give their written consent to the notary acting for both of them; and
- both parties consent in writing.
This rule is similar to the equivalent rule governing solicitors. The circumstances in which a notary may act for both buyer and seller in a conveyancing transaction are therefore extremely limited and the notary must make sure a full record of all advice given regarding separate representation is kept and all written consents carefully recorded and preserved.
- Notaries are able to identify a potential conflict of interests by accurate application of the Master’s Rules.
- If a notary acts for two or more parties to a transaction otherwise than by preparing notarial acts, obtaining appropriate consents in writing are obtained.
- Notary-conveyancers are aware of and comply with the particular restrictions set out in Practice Rule 9.2.2 and understand the reasons for those restrictions, if presented with a request to act for both seller and buyer.
- You ensure compliance with Practice Rule 9 within your practice and, if acting for two or more parties to a transaction as permitted by the Practice Rules, you obtain consent in writing from each party and document your assessment that there is no conflict of interest between the parties.
- If providing conveyancing services as a notary you do not act for both seller and buyer in a transaction relating to property situated in England and Wales unless the conditions set out in Practice Rule 9.2.2can clearly and demonstrably be satisfied.
- If permitted to act for both seller and buyer under Practice Rule 9.2.2 you make a full record of all advice given regarding separate representation which you preserve together with all written consents.
- You carry out a notarial activity other than a conveyancing transaction and excluding matters covered by Practice Rule 9.4.2 for more than one party without obtaining consent in writing from all the parties involved.
- In a non-conveyancing transaction you act for two or more parties without considering whether or not there may be a conflict of interest.
- You conduct a conveyancing transaction as a notary and represent both seller and buyer but fail to inform them of the advantages of separate representation.
- You do not obtain or preserve written consents.