Agents are Not Lawyers

Article 13 of the NAR’s Code of Ethics states that agents shall not engage in activities that constitute the unauthorized practice of law, and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.

According to Lackie, most agents are well trained as to what they can and cannot do when constructing contracts for their buyer clients and when reviewing offers for their seller clients.

“An agent has to adhere to filling out the blanks in a contract only; any alterations, addenda, etc. has to be left to the attorney,” Lackie says. “Venturing into the unauthorized practice of law can be a real problem with agents, and is a clear violation of Article 13.”

Lackie adds that good agents, however, are good negotiators and skilled at representing the interest of their clients, whether they are buyer or seller clients.

“Our most successful agents are excellent negotiators and very capable of structuring an optimal contract from a pricing and timing perspective, but leave out the legal details to the attorney,” he says

Proper Documentation Required

Whether a case goes before the Grievance Committee, Professional Standards Committee or a judge, proper documentation is critical to making sure your claim is satisfied.

Lackie believes agents should get written disclosures from their client, whether buyer or seller, outlining the responsibilities that the client and the agent have toward each other.

“In cases involving dual agency – when an agent is working for both a buyer and a seller in the same transaction – it is extremely important that both buyer and seller understand what the agent’s responsibilities are in that situation.”

Schwalb adds that if a buyer’s broker is showing that same property to more than one buyer, then he or she has a duty to disclose that in writing to the client. Other legal issues or disputes tend to surface during closings. Closings are generally handled by a representative from a title company and the respective attorneys involved. If the attorneys, lender (if there is one) and the Realtor have all done their job, a closing should run smoothly.

An incredible amount of paperwork is required these days to get a loan through underwriting, and a good agent assists the lender in making sure that all the lender requirements are satisfied. The property has to be ready to change hands at the time of the closing, the survey needs to have been completed and any issues regarding the condition of the property have been settled between the parties.

According to Lackie, inspection issues tend to arise earlier in the transaction – usually days after the price agreement – and have to be satisfactorily negotiated between parties. Sometimes work has to be performed prior to closing to satisfy a buyer concern; agents generally play a large role in assisting attorneys in taking care of inspection matters.