When Is a Florida Real Estate Agent or Broker Guilty of the Unauthorized Practice of Law?

Posted By on March 24, 2015

Last Update: 02/24/16

Buying or selling a home or condominium here in South Florida involves lots of paperwork, much of it legal documents like contracts with the real estate agent or broker (a listing agreement); as well as sales contracts, deeds, title searches and title commitments, disclosures and more. In fact, almost every kind of Florida real estate transaction (residential or commercial), or the rights to land, will have several legal documents that must be signed as part of the transaction.

Most documents related to real estate transactions involve Florida law and legal issues.

 

In Florida, real estate agents and brokers are educated on aspects of Florida real estate law as part of the testing requirements for their state real estate license. The agents and brokers must know about laws regarding zoning, their fiduciary duties to their clients, why clear title is so important, and much more in order to provide professional support to their clientele.

However, at no time is a Florida real estate agent or Florida real estate broker to practice law. It is against the law in the State of Florida for an agent or broker to do so; doing so is called the “unauthorized practice of law.” Why? Real estate law is complex and it’s easy for innocent people to get hurt by people who give advice when they aren’t properly educated and licensed to do so.

Were You Referred to a Florida Real Estate Lawyer for Legal Questions?

When a buyer or seller or landlord or tenant has a legal question, it’s very tempting for the real estate professional (including the property manager) to answer the question — and this temptation seems to grow the longer that person is employed in the real estate industry. However, the public needs to be well aware that just because an agent, broker, or manager has been “doing this for years” does not mean they are correct in their knowledge of Florida law and how it applies to the particular situation.

Practicing law here in Florida is defined by Florida statute. It involves giving advice that needs legal knowledge — and that means someone who is licensed to practice law by the State of Florida.

Can A  Real Estate Professional Give An Opinion?

Nevertheless, all too often, real estate agents and brokers skirt the edge of the envelope or go over the line and practice law without a license. For example, if a buyer or seller asks a broker or agent to check out the title to a piece of property, that’s not allowed. Title is a real estate issue of depth — and figuring out if a home or land has a “clouded title” is not only complex from a legal issues standpoint, it can be tricky from a legal research view, as well.

Florida Statutes 475.25(j) has been passed by the Florida Legislature specifically to address this situation. Under this law, no one with a Florida real estate license is allowed to give any opinion on the title to real estate. What they can, and should, do is obtain the legal opinion on title from a Florida real estate lawyer and then pass that legal opinion on to their clientele.

Florida Statute 475.25(j) states that a real estate professional is subject to losing their license if he or she:

“[h]as rendered an opinion that the title to any property sold is good or merchantable, except when correctly based upon a current opinion of a licensed attorney at law, or has failed to advise a prospective purchaser to consult her or his attorney on the merchantability of the title or to obtain title insurance.”

What About Real Estate Contracts?

Working with the Florida Bar (the official organization of Florida lawyers), the Florida Association of Realtors publishes standard real estate contracts that real estate professionals can use in the State of Florida for real estate transactions. You can check a form to see if it is one of these standardized documents by looking at the bottom of the form for a copyright reference.   For example, here is an online example of a “FARBAR” residential real estate purchase contract form. 

These forms can be used by real estate agents when a buyer wants to make an offer on a condo, for instance. The public should be aware that even these standardized forms carry some risk of the Unauthorized Practice of Law by a non-lawyer.  A common problem here is an agent that drafts an “addendum” to the standard form. These Addendum are legal documents and legally binding. (The public should also know that these standardized Contracts have several important sections that must be filled-in by the parties, including sections relating to who pays for certain expenses, whether or not the contract is assignable, when deposits are due, when inspections should be completed, cancellation provisions, etc.)

If the Addendum later results in that contract being unenforceable under Florida law, then the real estate agent and his or her real estate brokerage firm can be legally liable for the damages resulting from the deal gone bad — and the real estate professional could be accountable for practicing law without a license.

What Should You Do If You Need An Addendum?

Check with the Florida Bar Association and/or the Florida Association of Realtors to see if there is an authorized Addendum that meets the exact needs of your situation; otherwise, ask a licensed Florida real estate attorney to draft it. It may not be nearly as costly as you think and it will undoubtedly be cheaper than dealing with a flawed legal document in the future.

A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork including the all important promissory note, isn’t as costly as most of us think it is. And it’s always a lot cheaper than paying to fix a problem after a closing occurs.  Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry Tolchinsky

Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

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Comments

One Response to “When Is a Florida Real Estate Agent or Broker Guilty of the Unauthorized Practice of Law?”

  1. Gary De Pury says:

    Great Comments and I wish more of my brethren would read it.

    I often jest that “You attorney’s think you are so smart. It took you three years of Post Grad Law School to become an attorney when we Realtor’s all did it in two weeks.”

    Some attorney’s don’t get the joke (I hope you do or I have just offended you) and it is a poignant reminder that Realtors need not forget that they are mere Realtors and stop practicing law. I came across this page this morning because i received an email from just such a person who wants to set up his own LLC and establish his own business as a Real Estate licensee and I searched “Realtors Practicing Law.”

    Respectfully,

    Gary De Pury, J.D., SFR/CHS
    Broker-Owner
    Bay Vista Realty

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