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LawTalk
LawTalk, Attorney
Category: Legal
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Experience:  I am a practicing attorney with more than 30 years of experience in the legal field.
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Is an attorney son a fiduciary when he borrows money from

Customer Question

is an attorney son a fiduciary when he borrows money from mother and prepares the loan document? Specifically, does such attorney son have to tell mother that his demand note to her if no interest or principle payments are made for 10 years that the loan is barred by the California statute of limitation.
Submitted: 8 months ago.
Category: Legal
Expert:  LawTalk replied 8 months ago.

Good afternoon Steven,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today.

A borrower of money is never a fiduciary to the lender simply by being a borrower. There is no fiduciary relationship established by the borrowing of money. And the fact that the borrower may be attorney has nothing to do with whether there is a fiduciary relationship or not.

However, if the borrower acts as the attorney for the lender and has been hired to prepare a legal document relating to the loan, then there is a fiduciary relationship with regard to the document drafted.

But as the son presumably only drafted the note, and was never formally retained by the mother to represent her in any capacity (which would be expected if the son was simply borrowing money from the mother)---then there would not be a fiduciary relationship.

I would note that your statement about the loan being barred by some statute of limitations is not an accurate statement. And the fact that the note does not mature for 10 years---even if no payments are due in that 10 year period----is not violative of the statute of limitations and would be perfectly legal. The statute of limitations on a breach of the contract could not possibly start until the first payment became due and was not paid. So if that first payment (or payment in full for that matter) is not due for 10 years, then the CA 4 year statute of limitations for breach of a written contract would not even begin to run until after that 10 year period had passed.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

I hope that I have been able to fully answer your question. As I am not an employee of JustAnswer, please be so kind as to rate my service to you. That is the only way I am compensated for assisting you. Thank you in advance.

I wish you and yours the best in 2016,

Doug

Customer: replied 8 months ago.
Sorry, the note did not mature in 10 years, the note only says due on demand. our code says if no payments of interest or principal for ten years the note is barred by the statute of limitations. my issue is whether he should have told her about this 10 year limitation because he was in confidential and hence fiduciary relationship with her.
Expert:  LawTalk replied 8 months ago.

Good morning,

Thank you for the clarification of the facts. You appear to be referring to CA Commercial Code Section 3118 (b), which states in pertinent part "..if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note shall be commenced within six years after the demand.  If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of 10 years."

The issue here is whether he was acting as his mother's attorney in the preparation of the note for the loan or whether he was simply a borrower who offered the demand note. The fact that he has a license to practice law in the state does not automatically make him her attorney----any more than a physician that places a band-aid on their child is acting as that child's physician, thereby opening the physician to a medical malpractice case in the event of some alleged negligence.

What if the son had been licensed in a state other than that of his mother's residence and was not authorized to practice law? The preparation of a demand note does not legally require an attorney for the preparation and I suspect that every day family members engaging in a loan prepare their own demand notes---and that neither makes them an attorney nor does it imply a fiduciary obligation.

So, unless someone can show actual proof that the son was in fact acting as a retained attorney, as legal counsel, for the mother in the preparation of the demand note, then there was no fiduciary obligation owed by the son to the mother by reason of the loan or by reason of the son's professional license.

You seemingly want to urge that there was a "confidential relationship" with the mother that somehow exceeds the natural relationship of any mother and son, and that somehow that "confidential relationship" suggests a fiduciary relationship. I see nothing in the facts to suggest that the loan was a confidential matter, or was anything more than a simply loan from a mother to a son supported by a demand note.

I think that the bot***** *****ne issue here is that unless you can prove some sort of a fiduciary relationship owed the mother by the son---and the only way you get there is to prove that he was acting as her attorney, as opposed to simply a participant in a loan agreement----then I don't see how you would be able hold the son liable for failing to tell the mother about CA Commercial Code Section 3118 (b).

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Please remember to rate my service to you so that I can be compensated for helping you. Thank you in advance.

I wish you and yours the best in 2016,

Doug

Expert:  LawTalk replied 8 months ago.

Good evening,

Do you have any additional questions that you would like me to address for you?

In case you would like a phone call to further discuss these issues you have raised, I will make that offer to you. You are certainly not obligated to accept a call offer, but many people do find it helpful for clarification purposes, as well as to allow them to ask additional questions.

As I have provided you with the information you asked for, would you please now rate my service to you so I can be compensated for assisting you?

Thanks in advance,

Doug

Customer: replied 8 months ago.
at the time of the loan he was also acting as executor of my father's estate wherein my mother was the sole heir. The note states it is to be secured by a deed of trust which would have had to be prepared by him although there was no deed of trust prepared. He also did my mother's taxes and has a power of attorney. He also gave legal advice to my mom regarding her real properties. I'm sure if my brother wasn't an attorney my mom wouldn't have lend this much money without having an attorney look at it
Expert:  LawTalk replied 8 months ago.

Good morning,

Whether your brother was acting as your mother's attorney as regards ***** ***** of the demand note is a question of fact for the trier of fact to determine in the event that there is a lawsuit over the issue. In that event each side will have the ability to present facts and argument. A one sided argument is useless in determining the outcome of a matter that could go either way, depending on the facts. Regardless of the facts and speculation that you offer, it simply is not any help in my coming to some sort of reliable answer that you clearly are seeking.

You wrote: at the time of the loan he was also acting as executor of my father's estate wherein my mother was the sole heir. This is entirely unrelated to whether your brother acted as your mother's attorney in regards ***** ***** loan document.

The note states it is to be secured by a deed of trust which would have had to be prepared by him although there was no deed of trust prepared. The fact that no deed of trust could suggest that your brother was not hired by your mother to handle the paperwork treated to the loan. Unless your brother was a seasoned real estate attorney, why might he not have hired independent counsel to prepare a complex document like a deed of trust? A demand note is a basic legal document unlike a deed of trust. Or on the other side of the coin, an argument could be made that if he was her attorney then he failed to provide the services he was retained to provide. It is impossible for me to determine which.

He also did my mother's taxes and has a power of attorney. That does not prove, or even suggest, that he was your mother's attorney for purposed of the loan.

He also gave legal advice to my mom regarding her real properties. All this proves is that he has acted as her attorney in past circumstances----which is to be suspected as between a lawyer son and a parent in need of legal assistance.

I'm sure if my brother wasn't an attorney my mom wouldn't have lend this much money without having an attorney look at it This is simply speculation on your part, unless you have some evidence to support such a statement beyond your gut feeling.

What I am telling you is that it is not possible for me to rule as a matter of law whether your brother was or was not acting as an attorney for your mother in the loan process.

If you want to pursue this matter then I suggest that you consult with a local legal malpractice attorney who has the ability to file suit, engage in discovery and perhaps gather enough facts to be able to make a reasoned judgment as to liability. From where I stand, it could go either way and nothing short of a confession by your brother will sway my thinking here.

Please keep in mind that, even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions.

You may of course reply back to me and I will be happy to continue to assist you further.

I wish you well,

Doug