Real estate agents are licensed professional agents who are educated in real estate matters and are authorized to conduct real estate business in the state in which they are licensed. Real estate agents must have passed a state board exam to practice as licensed professionals.
It is important to note that in many states, there are significant distinctions between the terms “agent,” “salesperson,” “broker,” etc. In general, when a person uses the term “agent,” they refer to a salesperson instead of a broker. A broker generally handles higher-level real estate issues.
Further, in some states, an “agent” may be referred to as a “real estate broker,” while the broker is known as a “qualifying broker.” In some states, such as Colorado, all licensed real estate professionals are also considered brokers.
Once again, real estate agents can only perform certain tasks for their clientele. For instance, the sale or purchase of a home. A real estate agent’s tasks depend largely on their education, licensing, and certification. Examples of common tasks performed by a real estate agent include, but may not be limited to:
- Handling standard client forms and questionnaires regarding property matters;
- Answering basic questions that buyer or seller clients may have;
- Reviewing real estate contracts on behalf of their clients;
- Engaging in the negotiation of prices up to the closing of a deal;
- Showcasing a property to clients by guiding them in walk-throughs and open houses; or
- Providing their clients with specific information, up to a certain level of knowledge and expertise.
Once again, real estate agents, or salespersons, are frequently limited in their actual work capacity. For example, sometimes, real estate agents need confirmation from a supervising broker regarding more important transaction decisions. Further, real estate agents are not allowed to engage in the unauthorized practice of law.
It is important to note that the law and professional organizations do not allow professionals to exceed the scope of their training and licensing. The Code of Ethics and Standards of Practice of the National Association of Realtors addressed the unauthorized practice of law.
The Code states that realtors found practicing law without a license shall constitute the unauthorized practice of law. The following is a list of activities that are typically considered to be the unauthorized practice of law by real estate agents:
- Providing their clients legal advice or offering an opinion on the legal effect of a contract or any parties’ actions;
- Drafting legal documents that confer legal rights or obligations on a party, such as drafting a legal document that affects real property.
- It is important to note that courts have said that real estate agents and brokers may fill in the blanks in pre-printed agreements that have been pre-approved by a licensed attorney so long as they do not provide any legal advice or legal guidance of any kind.
- Typically, a real estate agent is safe to use a pre-drafted contract that has been drafted by an attorney and approved and circulated by the state’s Association of Realtors;
- Preparing or expressing any sort of legal opinion, such as guiding the effect of a contract;
- Assist their clients in initiating a civil lawsuit;
- Representing a client before any tribunal or in an administrative or other real estate proceeding; or
- Negotiating legal rights or responsibilities of a client in a contract or other setting.
As can be seen, numerous actions may constitute the unauthorized practice of law by a real estate agent. As such, if there is any question of whether or not an action may be considered an unauthorized practice of law, the real estate agent should advise their client to seek legal counsel.
