Brokers Preparing Contracts

The New York Times
Real Estate Q&A

Q.: When real estate brokers prepare contracts of sale for residential transactions, aren't they engaging in the unauthorized practice of law?
Lilian Marquez, Manhattan

A.: William A. Colavito, a Manhattan lawyer, who is chairman of the Real Property Law Section of the New York State Bar Association, said, that the issue of whether the preparation of real estate contracts by brokers constitutes the unauthorized practice of law, is of ongoing concern to lawyers and real estate brokers alike.

"And recently," Mr. Colavito said, "the office of the New York Secretary of State issued an opinion letter regarding the matter. The opinion states that in general, real estate brokers, who are not licensed to practice law in the State of New York, are prohibited from rendering legal advice."

"According to the opinion," Mr. Colavito said, "any real estate contract provided or prepared by a broker must either contain a provision making the contract subject to a lawyer's approval or be on a form approved by a joint committee of the bar association and realtors' association in the county, in which the broker operates. In addition, the contract should contain a boldface caveat directed to the contracting parties indicating that the document is a legal contract and recommending that they consult with their respective attorneys before signing."