As a real estate professional, unless you are licensed and certified to practice law, you should never give legal advice. No matter how serious or minimal the advice seems, you never know when a client will decide something is your fault. And giving legal advice is one of the top reasons real estate agents get sued. And what is considered legal advice can change depending on where you are.
Legal advice in Maryland is defined on their website here. And not everyone is supposed to give legal advice, even if they feel they can or seem like they’re in a position where it would be relevant. In DC this guide to using notaries has a question and answer about this. Although a Public Notary does sit in on legal proceedings, and signs off on documents by notarizing them (like property titles and deeds), if they are not a licensed attorney they are not supposed to give legal advice.
As a general rule of thumb, legal advice in real estate is anything that would present a solution or professional opinion about a factual situation. It could be disputes over property lines and encroachments, what the wording on a contract or deed means, and what a client is or is not allowed to require, ask, or needs to disclose. The lines can sometimes feel blurred here because as an agent you become familiar and are trained in sharing with clients what needs to be disclosed. But there are grey areas, and that is where it is best to consult with a licensed real estate attorney in the state or county the property is located in.
California for example makes it very clear that you as a real estate agent are not allowed to help your client with the disclosure form (click here to find it), also known as the Transfer Disclose and they have a helpful guide to help located here, although there may be newer ones so check with the state if you’re working there. Some states only require disclosing structural problems, while others require your client to disclose issues with the land and property. If you want a list of disclosure laws by state, NOLO has done a great job putting it together, and we at ATG Title have real estate attorneys on staff to assist with your questions and your transactions. Call or email us at (703) 934-2100 or email@example.com with your questions.
Outside of disclosures, legal advice can sometimes apply to:
- Whether or not it is ok to reject, negotiate, or accept offers if discrimination could be involved
- Handling disputes and problems with contracts, finances, and even what to do if someone gets hurt on the property during an open house
- Holding title and the transfer of it
- Whether or not titles are clear, or there is a cloud on the title
- Getting deposits back and cancelling a contract, even if it isn’t clear to close
- Drafting, editing, and modifying listing agreements, contracts, and “the paperwork” at closing
A good rule of thumb as an agent is to acknowledge the client’s question, write it down in your notes, and send a follow up email at the end of the day that says “You asked X and Y question, I’m consulting our general counsel and will get back to you.” It couldn’t hurt to mention that you are able to assist with the transaction and making sure the person is getting the best possible deal, but all legal advice needs to be given by a licensed attorney. Then follow up once you have heard from a licensed real estate attorney, copy the answer word for word to your client, and don’t try to interpret it for them even if they ask. This is because there is a difference between real estate agents and lawyers.
The lawyer handles all questions with regards to the legal process and agreements of the sale (outside of negotiating the price and deciding if the offer or pricing is good), and the real estate agent knows how to find defects and selling points that can assist their clients with the right decision on buying or selling a home. Not to mention market the property, create comps, and know the area better than anyone else.
Lawyers and real estate agents work hand-in-hand, but serve very different purposes. If you aren’t 100% sure whether or not your client’s question is legal advice or not, always err on the side of caution. Consult a licensed attorney, and then get back to them after with a paper trail. This way if they decide to sue you for giving legal advice, you at least have some evidence that you did not and where the confusion is coming from.