CAN YOU BE CHARGED WITH THE UNAUTHORIZED PRACTICE OF LAW?
The Tennessee Supreme Court has ruled that it is in the public's interest to permit real estate licensee to fill in the blanks of standardized contract forms used for simple real estate transactions. Conditions for this authorization include that:
* The forms have been prepared by, approved by, reviewed by an attorney.
* The forms are used in transactions handled by the real estate licensee in the usual course of his or her real estate business.
Even when the original form has been prepared by, approved by or reviewed by an attorney, additional clauses may not be added to a preprinted contract.
A real estate licensee is not authorized to draft original legal documents, such as:
* Earnest money agreements
Courts have prohibited real estate licensees from drafting or filling in the blanks on deeds, mortgages, or other documents after the signing of the sales contract, because these acts are not incident to the business of buying and selling real estate, but rather verifying or transferring title.
Simple real estate transactions traditionally are limited to transactions in which the property is conveyed outright and does not include easements, rights-of-way, or any other limitations of ownership.
If a transaction involves anything but a simple conveyance of land, the real estate licensee should advise parties to seek legal counsel for specific advice on how to create those legal rights.
A real estate licensee may not render opinions or counsel buyers and sellers on:
* The legal rights of parties
* The legal effect of documents
* The validity of title to real estate.
* Whether the seller should agree to a contract or deed or take back a mortgage.
* Whether the buyer should take title in joint tenancy with a spouse, or individually.
* Whether a promissory note should be with or without recourse.
* Whether or not a mortgage is assumable.
Liability for the unauthorized practice of law can be avoided by:
* Refraining from any activities that could be construed as the unauthorized
practice of law;
* Referring to legal counsel all questions concerning the meaning or effect of any contractual provision (even when using standard form contracts);
* Advising clients and customers to seek legal review of any contract where, in the licensee's judgment, the client or customer needs such legal guidance;
* Avoiding expressions of opinion, which may be misconstrued as a legal opinion.
Consequences for the unauthorized practice of law may result in :
* Discipline from the REALTOR®S Professional Standards Committee – Article 13 Code of Ethics
* Loss of commission.
* Liability for client's financial losses. (Damages)
* Court Injunction to cease and desist from any further unauthorized practice of law.
* Loss of real estate license.
TO COMPLY WITH ANTITRUST LAWS
· You must be committed to abiding by all applicable antitrust laws.
· Understand that the commission rates of your firm are based upon the cost of the services you provide, the value of these services to your clients and competitive market conditions. Your commission rates are not determined by agreement with, or recommendation or suggestion from any person not a party to a listing agreement with your firm.
· You shall not participate in any discussion with any person affiliated with or employed by any other real estate firm concerning the commission rates charged by your firm, or any other real estate firm in your community. Commissions should only be discussed with individuals within the office or with the client in the course of discussing or negotiating a listing agreement.
· When soliciting a listing, or negotiating a listing agreement, you must not make any reference to a "prevailing" commission level in the community, the "going rate," or any other words or phrases that suggest that commission rates are uniform or "standard" within our marketing area.
· The amount of compensation offered to cooperating offices offered by your firm to cooperating brokers or "commission split," is determined by the level of service we can expect a cooperating office to perform, and the amount of compensation necessary to induce cooperation under prevailing market conditions. You should NOT discuss the total commission of the listing with the competitor, only the amount he or she is to offer or receive. Commission splits, are not intended, and may not be used, to induce or compel any other real estate firm in your marketing area to raise or lower the commission they charge to their client.
· When soliciting or negotiating a listing agreement, you must not disparage the business practices of any other real estate firm, nor suggest that your office, or any other office, will not cooperate with any other real estate firm. Listing presentations shall focus exclusively upon the level of service and professionalism provided by your office, the results you have achieved for other clients, and the value the client can expect to receive for the fees you charge. Potential clients should be invited, and encouraged, to compare the value of your services to those of any other real estate firm in your marketing area. Likewise, any salesperson who is invited by a potential client to compare your services with those of any other real estate firm should do so by emphasizing the nature and quality of the services you provide.
· Whenever you are unsure about the proper way to respond to the concerns of an actual or potential client or customer, or whenever you have been present during an unauthorized discussion of fees or commissions, you should contact your principal broker or sales manager immediately. If necessary, the broker manager will consult your firm's attorney.
LICENSEES CANNOT USE THE TERM "VALUE" IN COMPARATIVE MARKET ANALYSIS OR BROKER OPINIONS
Tennessee Law requires Real Estate Licensees providing clients and/or customers with a Comparative Market Analysis ( CMA ) or Broker Opinion to not use the term "Value" in their CMA or Broker Opinion. In Tennessee only Licensed and Certified Appraisers may use the term "Value" in their property appraisals. A Real Estate Licensee should use simple language in a CMA or Broker Opinion such as:
n "this is a recommended listing price"
n "this is a recommended listing range", or
n "this is a recommended purchase price."
Appraisal Law [ T.C.A. §62-39-104 ] prohibits the use of the term "value" by anyone other than a licensed certified Appraiser.
NEW MINIMUMUM LEVEL OF SERVICES
FOR REAL ESTATE LICENSEES IN TENNESSEE
TENNESSEE AGENCY LAW HAS BEEN AMENDED AS FOLLOWS:
SECTION 1. Tennessee Code Annotated, Section 62-13-401, is amended by adding the following language at the end of the section:
The negotiation and execution of either an exclusive agency listing agreement
or an exclusive right to sell listing agreement with a prospective seller shall
establish an agency relationship with the seller.
SECTION 2. Tennessee Code Annotated, Section 62-13-404, is amended by adding the following language as a new subdivision thereto:
(3) Unless the following duties are specifically and individually waived, in
writing by a client, a licensee shall assist the client by:
(A) Scheduling all property showings on behalf of the client;
(B) Receiving all offers and counter offers and forwarding them promptly to
(C) Answering any questions that the client may have in negotiation of a
successful purchase agreement within the scope of the licensee's
(D) Advising the client as to whatever forms, procedures and steps are
needed after execution of the purchase agreement for a successful
closing of the transaction.
Upon waiver of any of the above duties, a consumer must be advised in writing by
such consumer's agent that the consumer may not expect or seek assistance from
any other licensees in the transaction for the performance of the above.
The effective date of this Act is July, 1 2006.
[ It is the goal of this legislation to insure that a Tennessee Licensed Agent is not forced into difficult situations or ethical conflicts where they are responsible for representing their client and the client of another agent who is an absentee. The consumer will have full disclosure as to what is expected from their full service or minimal service licensed agent. ]
OFFERS TO PURCHASE
There is a lot of misinformation and unlawful practices in our industry concerning the presentation of Offers to Purchase from prospective Buyers to Sellers by Listing Agents. Listing Agents may not arbitrarily decide not to present an Offer to Purchase to their Seller Client for any reason.
Some of the reasons reported are:
1. "I will not present your Offer to Purchase unless you use our firm's Offer to Purchase Form" or "the TAR Contract Form."
[ Agents cannot require a Prospective Buyer or cooperating firm to use a specific
Offer to Purchase Form.]
2. "You have to give me a copy of your Agency Disclosure Form before I'll present your Offer to Purchase."
[ There is nothing in Tennessee Law that requires a Cooperating Agent to give the Listing Agent a copy of his Agency Disclosure Form. Article 16 Standard of Practice 16-10, 16-11, and 16-12 of the REALTORS®' Code of Ethics requires REALTORS®, in whatever capacity they're working in a real estate transaction, to provide Written Confirmation of their Agency relationship to Seller/landlords no later than the execution of a purchase agreement or lease.]
3. "You have to give me a copy of your Buyer Agency Agreement before I'll present your Offer to Purchase."
[ There is nothing in Tennessee Law that requires a Cooperating Buyer's Agent to share a copy of his Buyer Agency Agreement with anyone except his Buyer Client and Principal Broker.]
4. "I don't like the way you've written this Offer to Purchase. Unless you rewrite it I'll not present it to my Client."
[ A seller client can make this "call" with his Agent's guidance. An Agent cannot.]
5. "Surely your Buyer is joking. I'll not present an Offer like this ( price too low, too many terms and conditions, too many contingencies and etc.)."
[An Agent can suggest his Seller Client not consider this type of an Offer, but, an Agent cannot make this call.]
6. I won't present any Offer to Purchase without Earnest Money".
[ Earnest Money is not essential nor a required component to make an Offer to Purchase.]
7. "My client is currently considering an Offer and I won't 'muddy the stream' by presenting multiple offers until he decides on that one.
[ You should advise your Client that he can accept the "best" offer; he can inform all potential purchasers that other offers are "on the table" and invite them to make their "best" offer; he can "counter" one offer while putting the other offers to the side awaiting a decision on his counter-offer; or he can "counter" one offer and reject the others.]
All of these reasons for not presenting an Offer to Purchase are violations of Laws, Rules, the REALTORS® Code of Ethics and Agency Agreements.
Who says that a Real Estate Agent must present ALL Written Offers to Purchase?
ü Federal Law: Title VIII of the Civil Rights Act of 1968- "All written offers to purchase must be presented to property owners without regard to Race, Color, Religion, Sex, Handicap, Familial Status, or national origin."
ü Tennessee Law: Title 4 Chapter 21 Section 601 #(3)- "Refuse to receive or transmit a bona fide Offer to Purchase, rent or lease on real property."
ü Tennessee Law: Title 62 Chapter 13 Sections 403 and 404- "The statuary duties owe by a licensee to his client include the receiving and presenting of All Written Offers to Purchase."
ü The Tennessee Real Estate Commission: Rule 1260-2-.08- "A broker or affiliate broker promptly shall tender every written Offer to Purchase or sell obtained on a property until a contract is signed by all parties."
ü The REALTORS® Code of Ethics: Articles 1, Standard of Practice 1-6 - "REALTORS® shall submit written offers and counter-offers objectively and as quickly as possible."
ü REALTORS® Code of Ethics: Articles 1,Standard of Practice 1-7- "When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all Offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing."
ü The Rules of the Multiple Listing Service of the Knoxville Area Association of REALTORS®: Section 2.1 Presentation of Offers - "The broker must make arrangements to present the offer to purchase as soon as possible, or give the cooperating broker satisfactory reason for not doing so."
ü The Rules of the Multiple Listing Service of the Knoxville Area Association of REALTORS®: Section 2.2 Submission of Written Offers - " The listing broker shall submit to the seller all written offers until closing, unless precluded by law, or government rules, regulation, or agreed otherwise in writing between the seller and the listing broker."
ü The MLS Sales Agency Contract: Terms and Condition # 4 - "Agent Shall, However, submit to me (the Seller) any and all written Offers to Purchase for my (the Seller's) consideration."
Real Estate Agents must present all Written Offers to Purchase to Sellers. An Agent has a duty to point out, advise, counsel his Seller Client of the specific reasons a particular Offer to Purchase should not be considered in its present form and suggest the Seller Client either reject the Offer for those reasons or counter the Offer to address the those reasons.
Agents have a legal and an ethical obligation to present all Written Offers to Purchase to Sellers. There is no presentation order. In other words - the order received means nothing. Since ALL Offers have to be presented, an Agent has a duty to help his Seller Client obtain the best "deal" possible. An Agent's number one duty is to promote his client's interest. That means an Agent has a duty to convey to his Client any and all information which may be material to the Client making a decision to accept an Offer to Purchase.
Another good reason for presenting all Written Offers to Purchase to a Seller Client - a Listing Agent who refuses to cooperate with a Cooperating Agent or present an Offer to Purchase from a Cooperating Agent, has released that Cooperating Agent to present the Buyer's Offer to Purchase directly to the Seller. When that happens, the Listing has violated agency agreement and his duty to his Seller Client and will not be entitled to a commission should that Offer result in the sale of the property.
CAN I USE "REALTOR®" IN MY DOMAIN OR EMAIL NAME?
REALTORS® often want to use the REALTOR® marks as part of their domain name or address to distinguish themselves, but the rules governing proper use of the REALTOR® marks must be adhered to at all times regardless of the media used. The National Association of REALTORS®' primary rules affecting use of the REALTOR® marks in domain names and email addresses state:
When surfing the Web for real estate homepages, it's quite common to come across sites belonging to REALTORS®. If you are looking to add your own electronic presence on the Internet, it is easy to get caught up in designing your own web page and choosing a domain name which will capture the attention of surfers and make you easily identifiable. REALTORS® often want to use the REALTOR® marks as part of their domain name or address to distinguish themselves, but they must keep in mind that there are rules governing proper use of the REALTOR® marks that must be adhered to at all times regardless of the media used. These rules are found in the National Association's Membership Marks Manual, a reference manual explaining proper use of the REALTOR® marks including examples of correct and incorrect uses. Here is a brief list of the principle rules affecting use of the REALTOR® marks in domain names:
1. The term REALTOR®, whether used as part of a domain name or in some other fashion must refer to a member or a member's firm.
2. The term REALTOR® may not be used with descriptive words or phrases. For example, Number1realtor.com, numberone-realtor.com, chicagorealtors.org or realtorproperties.com are all incorrect.
3. For use as a domain name or e-mail address on the Internet the term REALTOR® does not need to be separated from the member's name or firm name with punctuation. For example, both johndoe-realtor.com and johndoerealtor.com would be correct uses of the term as a part of domain names and email@example.com and firstname.lastname@example.org are both correct uses of the term as part of an e-mail address.
4. The REALTOR® block R logo should not be used as hypertext links at a web site as such uses can suggest an endorsement or recommendation of the linked site by your Association. The only exception would be to establish a link to the National Association's web site, REALTOR.org, or its official property listing site, REALTOR.com.
The public has adopted the use of all lower case letters when writing domain names, even those containing trademarks. Therefore, for purposes of domain names and internet addresses only, there is an exception to the rule on capitalization of the term REALTOR® and it may appear in lower case letters.
Whether you use traditional print media or the Internet, it is essential to use the REALTOR® marks in accordance with the rules and guidelines of the National Association. The REALTOR® marks should only be used to denote membership in the NATIONAL ASSOCIATION OF REALTORS®.
For more information on the use of the REALTOR® term and logo, go to www.realtor.org