Robert:

 He collected $1,ooo.oo for the preperation of real Estate Documents.Here in New York that would constitute the Practice of Law  without a Liscenes.

Who tells a buyer they don't NEED a lawyer so they can save a few dollars? The Real Estate agent who is collecting a commission from 3% to 6% of the purchase price. The Mortgage broker whose fees will likely exceed 3% of the purchase price. The Title agent whose fees are somewhere between 1% and 2% of the purchase price. In New Jersey lawyers generally charge less than 1/2 of 1%. A portion of the Lawyer's fee is for the adminstrative tasks involved in a settlement. If a buyer doesn't hire a lawyer he/she pays an additional fee to the title/settlement agent for those services. The net savings to the buyer when he/she does not hire a lawyer are minimal. The actual exposure is extraordinary. The buyer should be wary of any settlement provider, Mortgage lender or real esate agent that advises them against hiring counsel when they have their hand in the buyer's pocket. 

That's practicing law w/o a license. Great piece, but someone needs to contact the State's A.G.'s office.  Encroachment of the R.E. firm in to the areas of title insurance and property/contract's law is a bad harbinger of things to come.   Any real estate broker who thinks they can "Walmart"  title work and property law work (let alone the art of the contract) needs to spend an afternoon or two, under deadline, examining and underwriting a large commercial tract.  I hate real estate brokers; it's irrational, but it's how I feel.  They'd be much better off and stand to make a lot more money if they'd stick to the art of the deal and then cede control of the rest of the transaction to other professionals (mortgage brokers, tilte companies, lawyers, surveyors, appraisers, home inspectors etc.)  Make no mistake, the large real estate firms want one stop shopping for all these services INCLUDING LEGAL WORK.     Lawyers beware.  

Robert,

I was so impressed by this article that I took the liberty of excerpting some of this great information for a blog I wrote at ActiveRain.  I did of course give you full credit for your work-

I read an interesting article today at Source of Title written by Robert Franco.  Mr. Franco brings up a very good point, one that I think most Realtors don't consider when trying to help a friend or family member in a FSBO transaction.

I have seen, in my role as a title agent, situations where the Realtor has provided a blank contract of sale as well as the necessary addendum for lead paint, FHA financing, etc. One would assume that the Realtor probably reviewed the contract with at least one of the parties to the transaction.  

As excerpted from Mr. Franco's blog, he quotes a Realtor:..........

Thank you for this information. I know that I will share it will all of my contacts. I can honestly say that I really never gave this a thought as it relates to "practicing law".

I'm glad you enjoyed the blog.  With regard to filling out a standard Board of Realtor's purchase agreement, it is probably not the "practice of law."  There have been several cases that have held that it is not the practice of law to fill in blanks on a pre-printed form, such as this.  But, if they go further than merely filling in blanks, I believe that a line would be crossed.

Here, it wasn't so much that this broker filled out the form that I had an issue with.  It was with the $1,000 fee.  Personally, I believe that the standard contact in my county is terrible.  I would never advise a client to use it... I would much rather draft a purchase agreement that I believe better protects their interests.  But, I have seen some standard purchase agreements that were much better than the one used around here.  I think that is where the legal advice becomes important - recognizing the shortcomings of the forms and addressing them on behalf of a client.  That advice is worth something, unlike the form-filling service mentioned in the blog.

Best,
Robert A. Franco
SOURCE OF TITLE

The fact that they assist with filling out the standard "fill in the blank" form is not problematic, but I often see these forms with cross outs of entire paragraphs, altered words and so on. That to me is more the problem. As stated once they make changes they have effectively given "legal advice". Too, charging a fee for this service presents a few questions in my mind.  Are they being paid to render legal advice, are they collecting a "commission" and if so do they owe any portion of that commission to their broker, if they are not the broker of record in their office?  Perhaps I am overthinking it. 

Hope you have a great weekend and thanks for allowing me to "steal" from you.

Regards,

Charlene

Great post Robert!

To me this raises another question, if attorney's had still be part of the marjority of purchase and refinance transaction in the last 10 years, would they have put the breaks on the decisions of millions of consumers who got into loans they couldn't afford, with terms that were not beneficial.  Would they have stopped people from extracting every last dollar of equity, repeatedly, to pay off credit cards?  In short, would the subprime and subsequent crashes ever had happened or happened as severely if attorney's had be part of the equations?

I've lost count of how many times I've been sitting at the closing table as a title agent and thought to myself, what are these people doing - whether the loan terms were lousy, the fees were too high, or they were refinancing for the third time three years, but since I'm not attorney and nothing I saw was actually illegal, I couldn't say anything because it would be practicing law without a license - not to mention bad for business.

On the other hand, the few times I have seen an attorney involved in a "standard" residential transaction - the type were today they usually would not be, it was generally painfully obvious that they were not very experienced in real estate - questioning things that they should not have been questioning, or causing everyone else headaches because they were trying to look like they were earning their keep when in fact everything in the deal was good and there really wasn't anything else they needed to be questioning.

I, for one, have told Borrowers they were getting "ripped-off" by a lender charging too much on fees, etc., for  a refinance WITH THE SAME LENDER holding the existing mortgage.  In one case in particular, the Borrowers were able to save over $2,000 in lender fees and related closing costs by going to a different lender.  By the time you amortize that $2,000 over the life of the loan, it's probably more like $5,000 saved.

Of course, on the other hand, I did all the work for the refinance closing (title exam, closing, etc.) but because the borrowers recinded the loan within the 3-day period, I never got paid for that first closing, although they did do the second closing (with greatly reduced lender fees) with my office.  In essence, I did TWO closings for one fee - not too smart on my part, but at least I sleep well at night.