No good deed…

by James L. Goldsmith
September 2020

Ridiculous as it may be, some buyers and sellers hook-up without a REALTOR®’s involvement. It may be then that you get a call for help. What would you charge to put a simple agreement of sale together covering all the terms the buyer and seller have already negotiated? 

Maybe it’s because you can pick-up a few dollars, or more likely it’s just that you hate to say “no.” So, you agree to help. The first sticking point you come to is on page one of the agreement when you are required to address your involvement and agency relationship(s). Are you a dual agent? Are you a dual transaction licensee (does that even exist)? You may even conclude that it doesn’t matter what you are because it’s the terms between the parties that matter. Regardless, the agreement is signed, the transaction closes and your effort (which was probably greater than you anticipated) is rewarded, meagerly. 

Your takeaway may have been that your good deed was neither rewarded nor appreciated. But it can get worse, and frequently does. You will know it is worse when several years after settlement you receive notice of a lawsuit initiated by one of the parties. The nominal fee you earned is now going to be paid many times over in the form of your errors and omissions insurance deductible or attorneys’ fees. Too often I have been retained by an E&O insurer to defend such a REALTOR®. I advise, based on my experience, that the litigation will last several years! Was it worth it?

My advice is not to get involved as the scrivener to parties who have claimed to have a deal. First, it may be that your participation is the practice of law without a license. Real estate licensees are permitted to draft agreements when the agreement is the outcome of the efforts of the real estate licensees. I suppose it can be argued that even the buyer and seller who have found each other still have terms to negotiate and that your participation in those negotiations authorize your involvement. If that’s the case and you think you can do an end-run against the prohibition of practicing law, then just consider the message I’ve been drumming all along:  is it worth it? The exposure to malpractice and lawsuits is not reduced because you were not instrumental in putting the parties together or because you made a pittance. There is nothing good with a formula that is high on exposure and low on reward.

My advice: stay away. Refer the parties to a lawyer who hopefully will return the favor. If the parties truly need your advice, represent one and charge a fair price knowing that your exposure is as great as the transaction that produces a great commission. 

Mr. Goldsmith is an attorney with Mette, Evans & Woodside and serves as outside legal counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends Realtors® in disciplinary hearings conducted by the Real Estate Commission. Jim was one of the voices of the PAR Legal Hotline for the first 27 years following its inception in 1992.

Share this page: