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Understanding the 'Unauthorized Practice of Law' in Real Estate

Real estate agents must be cautious about giving legal advice, as doing so can lead to serious consequences, including fines, lawsuits, and loss of license.

Engaging in the "unauthorized practice of law" breaches Article 13 of the REALTOR® Code of Ethics, which mandates that agents recommend legal counsel to clients when dealing with specific issues during real estate transactions.

For example, while most states forbid non-lawyers from drafting contracts, agents can typically fill in blanks on attorney-approved form agreements with details such as party identities, property identifiers, and amounts.

Jay Rose, Esq., from IBREA, warns that problems often arise with handwritten addendums or additional conditions. "Every extra word you write in the contract can bring you closer to practicing law without a license," he notes. (Don't miss: Understanding Legal Protection for Real Estate Agents)

Agents should also avoid interpreting contract provisions or giving legal advice, and instead, always encourage clients to consult an attorney.

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