Dear Shannon: Professional Boundaries – Real Estate vs Legal Services?

ORLANDO, Fla. – Dear Shannon: I am reaching out for guidance on understanding a situation where I was found in violation of the Code of Ethics, and I’m not quite sure why. 

I have a long-time client (who is a friend) ask me for help putting together a power of attorney, which I did. I was later found in violation of the Code of Ethics, which has me questioning the professional boundaries between real estate and legal services.

Recently I provided professional real estate services for my friend’s company. Later on, my friend told me that his company was sending him out of the country on a business trip. He said the trip would involve quite a bit of air travel in remote areas, so he wanted to leave a power of attorney with his spouse while he was gone, you know, “just in case.” He asked me to prepare a power of attorney for him and without hesitation, I said “It’s a simple document, I’d be glad to prepare one for you.” So, I did. It was straightforward and easy to draft.

I was stunned when I heard a complaint was filed against me alleging a violation of the Code of Ethics. The complaint claimed that by preparing a power of attorney, I had engaged in the practice of law, a clear violation of Article 13.  

In this case, I happen to have general knowledge of my friend’s personal affairs. I knew he would have no reason for giving his spouse a power of attorney except to put her in a position to act in real estate transactions. So, I understood this request to prepare a power of attorney was essentially for real estate purposes. By preparing a legal document directly connected to real estate, I believed I had provided real estate services, not legal services. My only intent was to assist a friend in what I perceived as a straightforward real estate matter. Looking for some insight here. - Perplexed

Dear Perplexed: Thank you for reaching out. Your experience highlights the challenges that can exist when Realtors navigate the line between providing real estate services vs legal services. Let’s discuss how Realtors can stay within the ethical boundaries defined by the Code of Ethics by taking a look at Article 13.

Article 13 of the Code of Ethics states: "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."

Article 13 expressly prohibits Realtors from engaging in activities that constitute the unauthorized practice of law. In addition, it emphasizes that Realtors have an affirmative obligation to recommend the use of legal counsel to clients and customers when their interests require it.

Generally, the practice of law includes, but is not limited to, drafting legal documents. The protection of the public is crucial when those legal documents purport to give away legal rights. A power of attorney is a powerful legal instrument giving authority for someone to manage someone else’s affairs; granting the power for someone to act in someone else’s legal capacity. It should be drafted by an attorney to meet that person’s specific needs.

In your situation, you state that you have general knowledge of your friend’s personal affairs. Based on this, you concluded your friend would have no reason for giving his spouse a power of attorney except to put her in a position to act in real estate transactions. So, you contend, that preparing a legal document directly connected to real estate, was providing real estate services, not legal services.

Even though potentially well-intended, your efforts to be helpful and draft the power of attorney for your friend were misguided.  

Drafting legal documents is the practice of law. Here, your friend’s request to prepare a power of attorney was unrelated to a real estate transaction. General knowledge is insufficient to address all of your friend’s potential issues and needs regarding a power of attorney. He wanted a powerful legal instrument to give away his rights while he was traveling, and this should have been drafted by an experienced licensed attorney. In your scenario, the preparation of a power of attorney, despite its seemingly simple nature, falls within the purview of legal services. Because you drafted the power of attorney you were violating Article 13 of the Code of Ethics by engaging in activities constituting the unauthorized practice of law.

Article 13 also emphasizes that Realtors have an affirmative obligation to recommend the use of legal counsel to clients and customers when their interests require it. In the situation you describe, you didn’t recommend that your friend consult an attorney. You agreed to provide the service and draft the document. It is reasonable to infer that your friend was contemplating an end-of-life scenario (or at the very least incapacity) when he said he wanted to give his spouse power of attorney “just in case.” Drafting documents addressing end of life (or incapacity) situations are well beyond the scope of a real estate license. Thus, your friend’s interest clearly required you to recommend he use the services of an attorney. Failure to make such recommendation is problematic under the plain language of Article 13.

In the future, I encourage you to actively recommend legal counsel when appropriate and maintain clear communication about your expertise and the services you can provide within the scope of your real estate license.

Inspired by Case #13-1: Preparation of Instrument Unrelated to Real Estate Transaction. Other laws and rules may apply.

PRACTICE TIP: Feel free to call the Florida Realtors® Legal Hotline and speak to an attorney about navigating professional boundaries and staying within the scope of your real estate license.
• The Florida Realtors Legal Hotline is a FREE benefit available to all members. 
o Call: 407-438-1409
o Hours: 9 a.m. to 4:45 p.m., Monday through Friday
• Florida Realtors Legal Hotline attorneys answer questions about real estate license law and related real property issues. Attorneys also offer legal interpretations of the Florida Realtors/Florida Bar contract and other standard business forms and contracts.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Advice deemed accurate on date of publication

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