When is the “drafting” of contract language considered the unauthorized practice of law?
QUESTION: I know that the Real Estate Commission can discipline agents for “drafting” contract language. However, I also know that it is perfectly OK for agents to fill in the blanks in Standard Form 2-T and other forms. Where is the line between what is permissible and what isn’t? Is it OK for me to cross out language in Form 2-T? Is adding a word or two in the middle of Form 2-T always prohibited? What about the blanks in the other standard forms?
ANSWER: Unfortunately, there is no clear line between what is permissible and what isn’t. However, it is helpful to know some of the guidelines. We’ll try to summarize a few of them.
Section 93A-6(a)(11) of the Real Estate License Law authorizes the Real Estate Commission to discipline agents for “performing or undertaking to perform any legal service, as set forth in G.S. 84-2.1, or any other acts constituting the practice of law.” Article 13 of the REALTOR® Code of Ethics states that REALTORS® shall not engage in activities that constitute the unauthorized practice of law.
An article published in the October 2017 issue of the Real Estate Bulletin states that the “practice of law” includes “the drafting of documents which define the rights of others.” Rule A.0111 of the Real Estate Commission Rules explicitly bars the drafting of legal instruments and attempts to identify the type of “drafting” that is prohibited: “A broker acting as an agent in a real estate transaction shall not draft offers, sales contracts, options, leases, promissory notes, deeds, deeds of trust or other legal instruments by which the rights of others are secured.” Rule A.0111 goes on to state: “however, a broker may complete preprinted offers, option contracts, sales contracts or lease forms in a real estate transaction when authorized or directed to do so by the parties.”
As noted in the Guidelines for completing Form 2-T, the Offer to Purchase and Contract is the most important document in any real estate sale. As such, agents must take particular care to insure that Form 2-T accurately and clearly reflects the entire agreement of the parties. If a client directs you to add or delete specific wording to or from that form, and the change will define, secure, or have an impact on the rights of the parties, you should advise your client, in writing, to seek advice from an attorney. Even if your client asks you to do so, you should never add language, even on the blank lines in form 2-T, that is vague, i.e., capable of more than one interpretation, or creates any sort of ambiguity in the contract. On the other hand, accurately describing items of personal property on the blank lines in paragraph 3 is perfectly permissible.
Agents are also permitted to fill in the blanks on other standard forms, such as the Due Diligence Request and Agreement. However, agents should be sure to use language that is clearly understood and completely describes the agreement of the parties. If your client has a question about the legal consequences of the language you have used, you should immediately advise them to consult with their attorney.
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