What Does A Real Estate Agent Need To Know About Unlicensed Practice Of Law?

Real estate agents deal with a lot of legal documents in what's one of the biggest legal transactions of most of their clients' lives. However, while real estate agents have to have a professional license, their license does not include the right to practice law. Here's what you should know.

What's The Practice of Law?

The practice of law is giving legal advice or creating legal contracts. For example, if a client asks you what would happen if they break the purchase and sale agreement instead of closing, you can't tell them that the other party would win a judgment in court for a specific amount of money. You also can't write up a legal document, even a real estate document like a lease, for a client. In addition, making changes to an existing legal document, even writing in one extra term, is the practice of law.

Why Can't A Real Estate Agent Practice Law?

If you're not a licensed attorney, practicing law is illegal. In many cases, the unlicensed practice of law is a criminal offense, and it could often lead to a large lawsuit against you if the legal work you did results in one of your clients losing money on a deal.

There are some real estate agents who are also attorneys. They are allowed to practice law in a real estate transaction just like any other attorney. There's no ban on real estate agents doing the legal work at all. There's just a ban on them doing legal work if they're not licensed to do so.

What Do You Do If You Need To Change A Real Estate Contract?

If you need to change a real estate contract, for example, the buyer will lease the property back to the seller. If you don't have a form for that, you need to hire an attorney to create the right form. All a real estate agent can do is fill in the blanks or checkboxes on existing legal forms.

What Happens If Your Client Has A Legal Dispute?

If a deal starts to go bad, you should advise your client to speak to an attorney. All you can do is advise them to read the wording of the contract. If the two parties can't agree on what the contract says or what the outcome should be, they'll each need their own lawyer to represent them in a settlement or lawsuit.

Contact a real estate law firm for more information.