Real Estate Brokers and Salespersons and the Unauthorized Practice of Law
Pursuant to the New York Department of State, Office of General Counsel “Article 12-A of the Real Property Law provides for the licensure of real estate brokers and salespersons. A licensee is statutorily held to standards of competency and trustworthiness. Failure to abide by such standards can result in the suspension or revocation of the license. The New York State Department of State has long considered the unlawful practice of law by a real estate broker or salesperson as grounds for disciplinary action.”*
“Judiciary Law §478 prohibits the practice of law by non‐attorneys, the purpose of which is to protect the public from the dangers of legal representation and advice given by persons not trained, examined, and licensed for such work.”*
Some warnings to avoid the unauthorized practice of law are:
- Do not give advice or insert any provisions in a form that requires legal expertise.
- For fill‐in‐the blank forms, only fill in factual, non‐legal provisions such as: the names of the parties, the date and location of the closing, a description of the property, the consideration for sale and any other relevant facts. The brokers and salespersons would not be permitted to develop any "legal terms".
- Simple fill‐in‐the blank forms such as leases, purchase contracts, deeds, mortgages or any document effecting the rights to real property must contain an attorney approval clause.
- Even minor changes to a form, or striking a provision from a form, can be considered the unauthorized practice of law.
- The alteration or revision of the standard form of GRAR/MCBA approved contract without first obtaining attorney counsel and advice may constitute the unauthorized practice of law and is prohibited. This includes the alteration of the attorney approval section as recently approved by both boards.
To avoid a charge of the unauthorized practice of law, it is especially important that the attorney approval provision in the contract remain unaltered.