Are agents permitted to add language to agency agreements?

QUESTION: I am taking on a new buyer client. In paragraph 12 of the new Exclusive Buyer Agency Agreement (Form 201), it looks like we can add additional terms. This buyer wants my firm to represent them in buying multiple properties, and the compensation will vary based on the kind of property they are buying. Am I permitted to add language to Form 201 to explain this, or do I need an attorney to draft it?

ANSWER: While it might be a good idea to have an attorney assist you, especially if a lot of money is at stake in the contract, you are permitted to draft contract terms any time you enter into an agency agreement with a client.

Section 93A-6(a)(11) of the Real Estate License Law authorizes the Real Estate Commission to discipline a licensee for performing any legal service, as defined in section 84-2.1 of the North Carolina General Statutes, or “any other acts constituting the practice of law.” Section 84-2.1 defines “practice law” to be “performing any legal service for any other person, firm or corporation, with or without compensation, specifically including the preparation of… deeds, (and other legal documents).” The underlined language means that, when an individual prepares a legal document for themselves, that is NOT the practice of law.

Rule A.0111 of the Real Estate Commission Rules is consistent with section 84-2.1. The prohibition on drafting legal instruments set forth in that rule is explicitly limited to instruments “by which the rights of others are secured.”

An agent entering into an agency agreement on behalf of their firm is not doing so for others. Under the circumstances, an agent dealing with a client who wishes to vary the amount of compensation in the agency contract is permitted to do so. Just make sure that your compensation, for each type of property, can be specifically calculated. It cannot be a range or dependent on what a seller might be offering for cooperative compensation.

Release Date: 10/31/2024