Real Estate Brokers And Legal Advice

Real estate brokers in Washington frequently confront situations where they must carefully navigate to avoid acting as lawyers.  In Washington, it is a misdemeanor to engage in the “unauthorized practice of law.”  Court rules define the practice of law as “the application of legal principles and judgment with regard to the circumstances or objectives of another entity or person(s) which require the knowledge and skill of a person trained in the law.”  While this ordinarily requires licensure by a lawyer, the rule provides an exception for “[s]uch other activities that the Supreme Court has determined by published opinion do not constitute the unlicensed or unauthorized practice of law or that have been permitted under a regulatory system established by the Supreme Court.”

Our Supreme Court has expressed the view that a broker filling in the blanks on standard real estate forms, which have been prepared by an attorney, do not constitute the unauthorized practice of law.  See Cultum v. Heritage House Realtors, Inc., 103 Wn.2d 623 (1985).  However, brokers are likely venturing into the unauthorized practice of law when they proceed to draft non-standard terms in addenda, or when they advise clients on legal matters beyond the simplest and most obvious aspects of agency law and contractual rights.  There is unfortunately not always a bright line between unauthorized and authorized practice of law.  Commentators and courts recognize that public policy on this question must take into account both costs and benefits; on one hand, the public should be protected by competent legal advice that comes with proper legal training and licensing procedures, and on the other hand, it can be highly cumbersome and expensive for a licensed lawyer to have to be involved in every transaction.  Some jurisdictions take the view that traditional broker activities such as drawing up standard contracts do not constitute the practice of law.  Washington takes the view that these activities ARE the practice of law- but they are not unauthorized.  When a real estate broker engages in the “authorized” practice of law, they are held to the same standard of care as a licensed lawyer would be- a daunting prospect for a broker to potentially be on the hook for legal malpractice.  For this reason, both brokers and their principals must be extremely careful.

If you are drafting discretionary language in a real estate transaction which has not been reviewed by a lawyer, or if more advice is being given to a buyer or seller beyond the most basic aspects of a plain vanilla real estate transaction, it would be wise to consult a lawyer.  Beresford Booth lawyers have a wealth of real estate experience and can competently assist and advise you in your real estate transaction.

The lawyers at Beresford Booth have extensive civil litigation experience and would be happy to assist you with your litigation needs.

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