Realestateschool.org

Scope of a Broker License

Video transcript: Scope Of A Brokers License

A licensee should avoid drafting contracts, contract provisions, or legal documents that could be construed as the product of an unlicensed practice of law. As a real estate broker, your job is to assist your clients in completing the standard contract forms, which have been reviewed and approved by an attorney. Use extreme caution in adding anything to these standard forms.

In Cultum v. Heritage House Realtors, the court ruled that licensees need to take great care in using the standardized forms and must ensure that all additions are in line with the terms and conditions of the contract, or the licensee can be held liable to/for damages and losses. According to the ruling:

“[An agent] is permitted to complete simple printed standardized real estate forms, which forms must be approved by a lawyer, it being understood that these forms shall not be used for other than simple real estate transactions which arise in the usual course of the [agent's] business and that such forms will be used only in connection with real estate transactions actually handled by such [agent] as [an agent] and then without charge for the simple service of completing the form.”

Another important element in this ruling is the determination that brokers filling out preprinted forms will be held to the same standard of care as a practicing attorney. They cited case law, starting with the Bowers V. Transamerica Title Ins. Co., which ruled that an escrow company would be held to the standard of care of a practicing attorney because they prepared legal documents related to a real estate transaction. The Cultum v. Heritage House decision extended the standard of care to real estate brokers when completing preprinted forms. Prior to the decision, completing preprinted forms hadn't been established explicitly by the courts and could potentially have been construed as the unauthorized practice of law. This decision has since been extended to apply to lenders as well (Perkins v. CTX Mortgage Company) when preparing contractual documents. It's vital to understand that the allowance by the court to complete legal forms is strictly limited to preprinted forms prepared by attorneys.


Related Blog posts

Back to blog

Registered User


Login Forgot your password?

New User?


It's free and only takes about a minute.

Sign Up - New user


I understand I must be 18 years of age to have a real estate license in WASHINGTON State.

What is your email?

What state are you in?

Submit