BARRISTER'S BRIEFING: Unlucky Number 13

Leon Cameron, Esq. | October 2017

Realtors are in the business of listing and selling homes. They cannot and should not dispense legal advice. To my non-lawyer readers, this is not meant as a personal affront. With Friday the 13th in the eerie month of October no less, perhaps it is appropriate to address Article 13 of the Realtor Code of Ethics:

“REALTORS® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.”

One common issue where Realtors may be tempted to dispense legal advice is with respect to rentals and the occupancy expectations of landlords. Licensees should not be a party to fair housing violations, including violations related to familial status and marital status, which speak to the number of persons in a rental. Notwithstanding, licensees should also not dispense legal advice to their landlord clients. Landlord clients may be given neutral, verifiable legal information so that they may make their own determinations in consultation with private legal counsel.

Concerning local laws, the client can be directed to the local Town or City Clerk or local governmental website. At the state level, they can go to the official page of the New York State Division of Code Enforcement and Administration, which is accessible at www.dos.ny.gov/dcea. Federally speaking, the Department of Housing and Urban Development (HUD) lists their occupancy guidelines at www.hud.gov.

Another frequent area where buyers and sellers are prone to seek out brokers and agents for legal advice is with contract interpretation. If a buyer or seller (or landlord or tenant) wants your opinion as to whether they are in breach of a lease agreement or purchase contract, refer them back to their personal attorneys. Often the request from the client is conversational e.g. “What does this clause mean?” Nevertheless, resist the temptation to take the bait and opine. If the client acts illegally in accordance with your de facto legal advice, your errors and omissions insurance coverage is unlikely to cover it, should litigation arise. Even if you happen to be a licensed attorney-at-law, check with your broker’s office policy on affiliated agents (who double as attorneys) giving legal advice. If you are both a licensed broker and a licensed attorney-at-law, make sure the client is aware at all times in which capacity you are serving.

Lastly, another common area that arises with respect to legal advice is that of material defects. Although material defects must be disclosed to cooperating agents, licensees are not expected to make independent determinations as to what constitutes one. Again, the client should receive private legal advice, typically from their closing attorney, in making that judgment.

By refraining from the unauthorized practice of law, however well intentioned, the liability of licensees is lessened and real estate clients are better served.

Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.

Leon Cameron, Esq.
Leon Cameron, Esq., is Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.