By: Guest Author Jon Haley, Virginia REALTORS® Staff Counsel
You may have noticed an article in the latest REALTOR® magazine that raised your eyebrow a bit. The article, entitled “Can You Change That Contract?” cautions licensees that in some states, striking portions of a standard purchase contract is considered the practice of law. That’s bad news for licensees who do not have a law license, as the unauthorized practice of law is a misdemeanor in Virginia. Luckily for Virginia licensees, the article isn’t nearly as worrisome.
Licensed real estate agents in Virginia are protected so long as they adhere to the rules. Virginia Code section 54.1-2101.1 states that “any person licensed under this chapter may prepare written contracts for the sale, purchase, option, exchange, or rental of real estate, provided that the preparation of such contracts is incidental to a real estate transaction in which the licensee (i) is involved and (ii) does not charge a separate fee for preparing the contracts.” In addition, the Virginia State Bar has created a set of Unauthorized Practice Rules, or UPRs, that govern the legal profession. UPR 6-103(3) provides further protection for real estate agents:
A real estate agent, or his regular employee, involved in the negotiation of a transaction and incident to the regular course of conducting his licensed business, may prepare a contract of sale, exchange, option or lease with respect to such transaction, for which no separate charge shall be made.
Crossing out language from a standard form contract would fall under the umbrella of preparing a contract for sale, so you are protected from an unauthorized practice of law complaint if that is what you do.
However, it’s also important to remind you what you should NOT be doing. You cannot prepare a contract if you are not involved in the transaction. If a friend asks you to prepare a contract but does not hire you to represent him in the transaction, under Virginia law you must decline. Additionally, you cannot charge a separate fee to prepare a contract. Basically, you should think of the preparation of the contract as part of a larger package, not an a la carte item. Additionally, you should not interpret any parts of the contract for your client. If the client has questions about what a particular section does or does not mean, you should direct him or her to a real estate attorney.
You also want to be careful about drafting language to add to a contract. Creating new language can be risky and may not comply with E&O requirements, but Virginia REALTORS® (and many other forms providers) offer a standard clause booklet that has common terms already drafted for you. You can also check with your broker, who may already have language as well.
One resource available to your clients, and you, is the Virginia State Bar Lawyer Referral Service, which will connect them to an attorney they can speak to for 30 minutes for $35. More information is available on the VSB website here: http://www.vsb.org/vlrs/index.php/public/vlrs/ .