A real estate sales agent is presenting an offer to a seller client. The offer includes a special provision drafted by the buyer's agent that states, 'Seller agrees to pay for any and all repairs identified in the inspection report, up to a maximum of $5,000.' Which of the following is the most appropriate action for the sales agent to advise their seller client?
- AAccept the offer as written, as special provisions are common in contracts.
- BModify the special provision to cap the repairs at $2,500 and initial the change.
- CCounter the offer to remove the special provision and use a TREC addendum instead.
- DAdvise the seller to consult with an attorney regarding the clause, as it may constitute the unauthorized practice of law.
Show answer & explanationAnswer & explanation
Correct answer: D. Advise the seller to consult with an attorney regarding the clause, as it may constitute the unauthorized practice of law.
Real estate licensees are prohibited from practicing law. Drafting complex clauses that obligate parties to specific actions beyond simple factual statements often crosses into the unauthorized practice of law. Advising the seller to seek legal counsel is the most responsible action when faced with such a provision, especially one drafted by another agent.
Why the other options are wrong
- A. Accepting without legal review is risky, as the provision may be legally problematic or disadvantageous.
- B. An agent modifying a legally questionable clause would also be engaging in the unauthorized practice of law.
- C. While using TREC addenda is preferred, the immediate issue is the legal nature of the drafted clause, which requires attorney review.
Unauthorized Practice of Law (Texas - Special Provisions)
Real estate licensees in Texas are prohibited from drafting legal documents or adding complex provisions to contracts that alter the legal rights or responsibilities of the parties, which constitutes the unauthorized practice of law.
- Licensees can only fill in blanks on TREC-promulgated forms.
- Simple factual statements are permissible in special provisions.
- Complex legal clauses must be drafted by an attorney.
Memory trick: Special provisions needing legal advice, are a sign of unauthorized legal practice.