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And many (maybe most?) agents don't think twice before trying to explain and interpret their various provisions when clients have questions about what they are signing. And it isn't unusual for agents to re-write some of the provisions for clients who want to do something that isn't included in the boiler-plate.
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23 Comments on Do You Practice Law Without A License?
Juliana, it's interesting, because once the buyer understands that it's a distressed property, does it create a perception that the seller will accept a lower price?
I have bought and sold property (well, a co-op) in NYC and also in Texas. My deal in NYC with an attorney definitely left me feeling more secure... there was something about a formal looking contract without a bunch of crossed out negotiation battle scars on the paper and filled out by a lawyer with a graduate degree that just inspired more confidence than a fill-in the blanks version. There are plenty of compotent real estate agents in the world, and some of them are attorneys, but even I will admit that I am not licensed to practice law.
I am amazed at some of the contracts that I review, as part of analysing the agreement for sale, and I see narrative agreements and addendums, written by agents. The standard form is used, however they seem to feel freelancing some of the detail is within their scope of work.
Well Patricia, I think some of that is how this thing came into play. And actually, the general consensus in my brokerage on how this all reads right now is, when the buyer understands it is a distressed property, they can actually be included in the "Distressed Property Consultant" designation. Everyone signs the forms.
My take on it is that it is set up that way to protect the home seller in that event. It is getting a lot of discussion right now. My broker actually held a mandatory class for all agents in the office to better understand it, because it of course is accompanied by new forms, new listing procedures for the MLS, and every agent needs to know about it because of the implied legalities.
I think another AR blogger or two from Washington State has been voicing their opinion in post as well.
I am all for protecting the client... and I can handle being a consultant, but prefer to leave the rest of the legalese to the attorneys. ~ Julianna
Patricia: Some day it may come down to a lawyer writing our offers... and that too will prob. cut into our commissions.
The attorneys are trying to figure out how to keep all the money. When that happens we can sue them!
Patricia, our contracts are only 4 pages. I cannot even imagine what yours must be like. (I would feel as you do.) It's the various foreclosure addendums that I feel as if one needs to be a lawyer to interpret. Unbelievable...
You're right, we are in a difficult position with contracts that require us to fill in the blanks. And, of course, explain them to the clients. But what's an agent to do? It seems to be the only option for us.
Pat, I know they do this in Toronto, the agents show the home, write the offer and then hand it to the attorneys. Sounded good to me when Craig Proctor mentioned it in a seminar. It would save having an assistant to make sure all contingencies were fullfilled in a timely manner.
Hi Pat,
NC has almost done away with the blanks and the reason is just this, we are practicing law when we fill them in. This is preached year after year in our update courses.
Pat - I love ya! But have you lost your mind?!?! The reason the contract in MD is 40+ pages now with all the Addenda is because of lawyers. Can you imagine the cost of buying and selling if real, bona fide, "paid for law school" lawyers got into the act? Of cousre, they wouldn't take any guff from clients wanting to "negotiate" (i.e., lower) fees. The cleints would pay becasue, after all, they're dealing with "lawyers". Not all lawyers are created equal in the same way that not all Realtors are of equal caliber and experience.
It's bad enough that the public perceives us as tour guides with a keypad. Turn us into "showing agents" that turn the real meat and potatoes of the profession over to lawyers and you might as well let the banks take over real estate and "punch in" and "punch out" for your $15/hour, 5-9 and weekend j-o-b.
Now, I'm a 'youngin'" in the business -- only 10 years. But, I have never run into any legal issues (knock on wood) that resulted in me, my Broker, or my clients getting into any hot water. In my mind,bringing lawyers into the transaction is the quickest way to take a buyer who wants to buy and a seller who wants to sell into adversaries in the opposite corners of the boxing ring. Realtors are supposed to be good negotiators. If they get that part right, the rest is pretty smooth.
Sorry for the long comment but you pushed my button on this issue. Can buddies disagree? ;)
Yikes, I know our contracts are long but I certainly do not want lawyers to be writing them nor do i want to have to be a lawyer as a pre condition for being a Realtor. We do walk a fine line and I know there are many agents who cross over and never think twice about it but that is not my concern. My concern is to make sure that I do not. Know thy contract, know thy laws and know to tell my clients that they are welcome to have a 'lawyer' read over if they so choose. Great post as always.
Hi Pat, we are so lucky to have Seth Wiessman, a closing attorney that is also an author of the "Red Book on Real Estate Contracts in Georgia". This book has special Stipulations written by him that agents can use while writing up an offer or counter. Beats trying to pencil in your own words that may or may not land you in hot water.
Pat - we keep in our computer various clauses (for ites not covered in the boilerplate or the printed addendums) that have been written or approved by an attorney. When you write a simple addendum, even if it's one or two lines, that's when you can be practicing law. Good advice!
Hi Patricia...No I do not practice law. I am not looking for trouble. I have my hands full practicing real estate.
Kathleen
P.S. I am not a CPA either.
Im sure they understand all of the contracts and don't overstep the bounds between agent and attorney.
The stated purpose of the new HAWAII law is to protect the property owners facing foreclosures, liens, or encumbrances from persons who would prey on them.
This act addresses possible misrepresentations by such persons who would offer assistance to these owners and requires them to fully describe their services in a written contract. It gives the property owner the right to cancel at any time before a "distressed property consultant" has performed all services called for in a contract.
The problem arises in the definitions section: "Distressed property consultant means any person who performs or makes any solicitation, representation, or offer to perform any of the following relating to a distressed property: ... Stop or postpone the foreclosure sale or loss of any distressed property due to the nonpayment of any loan that is secured by the distressed property..."
Previously, these were duties real estate professionals performed when they represent a seller in a short sale. Unfortunately real estate professionals are not specifically excluded in this law. However, lenders, attorneys and insurance companies are all exempt from the law. Why not real estate agents?
Short sales are a challenge for agents under the best of circumstances. They take much more time and their commissions are usually reduced by the lenders as a condition of approving the short sale transaction.
Agents work on short sales as a service to their clients. Under the new law, real estate professionals acting as "Distressed property consultants" have their compensation capped at two most recent monthly mortgage installments of principal and interest due on the loan first secured by the distressed property or the most recent annual real property tax... which ever is less".
This is very little incentive for a real estate professional to list, market, find a buyer and negotiate with the lender to help the distressed seller avoid foreclosure, especially when that compensation is split with a co-operating broker representing a buyer.
Ultimately, I believe the consumer will be harmed greatly by this law. If real estate agents are not involved in helping distressed sellers sell their property through the short sale process and marketing it on the Multiple Listing Service, the lenders will have no choice but to foreclose.
The law must be amended to exclude licensed real estate professionals from the definition of "distressed property consultant" when they are performing services on behalf of a buyer or seller.
Patricia,
I have talked to agents from NY and while they are accustomed to turning things over to lawyers many of them are pretty frustrated. I have found that whenever an attorney gets involved it takes much longer and there is much more tension. I think the primary reason is that, as agents, we are restricted to our particular field of expertise. Not so with lawyers, at least in Maryland. A divorce lawyer or personal injury lawyer can get involved and make a complete ass of themselves speaking about things they have no clue about and we dare not challenge then (I have) If lawyers are going to get involved they should be required to have demonstrated real estate experience. As a CE instructor who teaches MD and NAR ethics courses I do tell agents that the unauthorized practice of law is the most frequently violated article of the code and state law. The answer is for us to require professionalism from our peers. I don't think it's getting lawyers involved in every detail.
Hi Patricia, Well, I am a real estate broker and also an attorney, but I am no longer practicing law. My legal experience does help me in drafting documents that are clear and concise. The part I think is a little confusing is knowing when I am practicing law and when I am just being a broker - the line is fuzzy for me since I am used to doing both. But I am licensed for both so I guess it's not as important for me to find that line.
Hi Patricia - You raise some great points. We deal with legal contracts on a regular basis but when a question of law arises we are best advised to have our clients seek legal counsel.
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