What information am I able to provide clients when they ask a legal question?

Due to the nature of the real estate business, Realtors® often receive requests from clients for what amounts to legal advice. In an industry controlled by contracts, this is unsurprising. Realtors® must walk a fine line in representing their clients’ interests without engaging in the unauthorized practice of law. You, as a Realtor® may provide legal information, but you may not provide legal advice or draft legal documents or clauses.

Article 13 of the Code of Ethics not only prohibits the unauthorized practice of law, but also places an affirmative duty on Realtors® to “recommend that legal counsel be obtained when the interest of any party to the transaction requires it.”

Realtors® may assist clients in the completion of standard form contracts, such as those contained within the MassForms™ library. If edits are being made to the terms of the contract, or additional clauses are being included, legal counsel should be engaged in the process. Another common scenario where clients should be directed to seek legal counsel is when an escrow dispute occurs.

Many times, clients may be resistant to hire an attorney due to financial concerns, or simply thinking an attorney is unnecessary, and as a result, may push the Realtor® for more assistance than the Realtor® can legally provide. In these situations, it is recommended that the client be informed in writing that the Realtor® is unable to offer legal advice and once again recommend the use of an attorney.

An attorney is asking to be compensated for a referral or as a cooperating agent. Is this allowed?

It is a common misconception that attorneys in Massachusetts are automatically licensed as real estate brokers, as well. Prior to being legally able to engage in real estate brokering and be compensated for real estate services, including referrals, an attorney must apply for and be issued a Real Estate Broker’s License from the Board of Registration of Real Estate Brokers and Salespersons.

Massachusetts licensed attorneys in good standing are exempt from the Board’s examination requirements prior to licensure but must still submit an application for licensure accompanied by a letter of god standing tom the Massachusetts Supreme Judicial Court. Only once a broker’s license is issued, may a Massachusetts attorney operate as a broker or be compensated as such.

Additionally, only MLS participants are entitled to compensation as offered through the MLS. If the attorney-broker is not a participant of the applicable MLS, they would either need to enter into an agreement with the listing broker pertaining to cooperating compensation or seek compensation from their buyer-client.

Is a seller required to sign the rejection on the offer form?

No, a seller is not legally required to formally reject an offer. If using the MAR Contract to Purchase (Form 501), section 2 provides for the duration of the offer by including a date and time that the offer is valid until. If the seller fails to accept the offer by the date and time included in this section, the offer is considered rejected. While the buyer can always request that a seller formally reject their offer, there is no legal obligation for the seller to honor this request.

If the listing agent is a REALTOR®, the cooperating broker may make a written request that the listing broker provide written affirmation that the offer was submitted to the seller, or that the seller waived the obligation to have the offer presented. This obligation is contained within Standard of Practice 1-7 in the REALTOR® Code of Ethics.