It may seem obvious that the job and role of a real estate agent and that of a real estate attorney are very distinct when buying or selling property; however, many times buyers and sellers are confused about the limitations of a real estate professional, and end up realizing the importance of having an attorney only after it’s too late. The following are functions that are reserved to a real estate lawyer, all of which constitute the practice of law and are beyond the pervue of an agent’s abilities.
- DRAFT LEGAL DOCUMENTS
Realtors have the advantage of pre‑promulgated forms for the most common real estate transactions and ancillary events. These forms are promulgated trade associations such as the Texas Association of Realtors and even the State (the Texas Real Estate Commission). While a real estate agent is able to complete these documents by filling-in blanks on the preprinted forms, they absolutely cannot draft real estate contracts or other documents, including leases and amendments.
There are also limitations of the pre promulgated forms in contemplating all negotiations that may arise in a transaction. For example, none of them provide for a lease with a purchase option, a contract for deed or other specialized arrangements between a buyer and seller. In order to ensure that these situations are provided in documents only a licensed real estate attorney can draft instruments.
- GIVE LEGAL ADVICE
Although a real estate agent has knowledge superior to the average person about documents related to the purchase, sale, lease and exchange of real property, they are prohibited from providing advice about the documents, including the legal effect and validity. Only a licensed attorney can provide legal advice. Too often, the advice of an experienced real estate lawyer is not sought until after the transaction has gone sour, and legal problems are already on the horizon.
- RENDER OPINIONS ABOUT TITLE
Most real estate purchases involve a title policy or other abstract review to ensure that the seller has clear and marketable title that can be conveyed to the buyer. Where a title company is involved, the title examiners will procure and review these documents, and make take a position concerning the validity, force or effect of an instrument appearing in a property’s title chain. A real estate agent may not provide any advice or render any opinion concerning the title examiner’s position, or the force and effect of a document that may appear in the chain of title. Only a qualified real estate attorney is capable of rendering opinions related to title and instruments that may affect or encumber it.
- DISPASSIONATELY REVIEW COMMISSION AGREEMENTS
Obviously, listing agents who market properties on behalf of Sellers, and buyers’ agents who represent Buyers in property searches do so for compensation. Generally, the terms of that compensation including the amount, conditions and time for payment are reflected in written commission agreements (a Listing Agreement or a Buyer’s Representation Agreement). While a real estate professional obviously provides and presents these documents to their client, they do not do so independently, but rather in the hope and expectation that the client will sign. There is nothing inherently wrong with this process. However, only a purely objective real estate attorney can provide unbiased advice about the terms and scope of a commission agreement, and whether it is in the client’s best interest to sign this agreement or negotiate for a more favorable commission deal.
