Be Careful Giving Legal Advice!
By Brian Madigan LL.B.
It is always difficult to draw a line where a real estate agent's advice ends and a lawyer's advice begins. At best, it is a grey area.
The two extremes are usually quite clear to everyone, so they don't present a problem. The difficulty really only arises in the grey area.
The grey area is larger for some real estate agents than others. That is because they are knowledgeable, experienced and prepared to offer comments, viewpoints, opinions.
Those that draw the line closely, and don't speak up in most cases have nothing to fear. No one will accuse them of practising law. They have nothing to say!
Now, they still may be at risk of a lawsuit for negligence, because a good deal of real estate business requires advice on legal matters. They must be able to explain agency, contracts and negotiation. Failure to do so, may lead to prosecution of a claim or disciplinary proceedings. So, you can't just keep quiet all the time.
The next step is to make sure that as a real estate agent, you don't go too far. Don't guess! If you don't know the answer, then say so. What is your level of expertise? What is your comfort zone? Don't go beyond that.
Many clients and customers will be looking for "free legal advice". If they were to ask a lawyer, they would be charged, but they can ask you for free. This is the time when you:
•1) make the disclaimer, you are not practising law,
•2) recommend that a lawyer's advice be sought.
If you have already offered an informal viewpoint in a grey area, then qualify it, document it and formalize it. I do appreciate that will take some time and not everyone wants to fool around with things like that.
But, at the very least you probably have e-mail. So, send an e-mail to the client or customer right away. State the question, offer your response, include the disclaimer and recommendation.
This will form the basis of your defence at trial or in disciplinary proceedings. This is the best evidence of exactly what you said. It was timely and completed contemporaneously with the event. It may be somewhat self-serving, but so what..... it's the professional way of carrying on business.
In my real estate practice, I am frequently placed in such circumstances. I advertise to assist in complex commercial matters and real estate litigation. So, the distinction is always important. Am I covered by my real estate errors and omissions policy? Having practised law for 25 years, am I really being sought for legal advice?
The answer to those questions in the grey area cannot be properly resolved unless there is a clear distinction between the roles. While the client is unrepresented by a lawyer, I am at substantial risk. Once they retain a lawyer, then my risk of potential liability decreases substantially.
More than anything else, the actual representation of the client by their own lawyer protects, defines, and confines me to my role. No grey area anymore!
Be careful in the grey area!
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
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