State ex rel. Indiana State Bar Association v. Indiana Real Estate Association, Inc

Brief Fact Summary.

The State Bar Association of Indiana brought a complaint against the Real Estate Association of Indiana and realtors in the state claiming that the realtors’ practice of filling in blanks on legal forms constituted the unauthorized practice of law.

Synopsis of Rule of Law.

Generally, the filling in of blanks on legal instruments, prepared by attorneys, which require only the use of common knowledge regarding the information to be inserted in the blanks and general knowledge regarding the legal consequences involved, does not constitute the practice of law.

Facts.

The State Bar Association of Indiana brought a complaint against the Real Estate Association of Indiana and realtors in the state claiming that the realtors’ practice of filling in blanks on legal forms constituted the unauthorized practice of law and requesting an injunction to prevent such activity.

Issue.

What are the permissible activities of the realtors?

Held.

The court sets out guidelines described below. Injunction denied.
Generally, the filling in of blanks in legal instruments, prepared by attorneys, which require only the use of common knowledge regarding the information to be inserted in the blanks and general knowledge regarding the legal consequences involved, does not constitute the practice of law.
However, when the filling in of such blanks involves considerations of significant legal refinement or the legal consequences of the act are of great significance to the parties involved, such practice may be limited to members of the legal profession.
The court adopted the guidelines set out by the Missouri Supreme Court in this regard, except that the Indiana Court required the execution of deeds to be restricted to attorneys.
A real estate broker may use a standardized contract in a form prepared or approved by counsel and may complete the form by filling in the blanks.
A real estate broker may use standardized forms of Listing Agreements, Earnest Money Contracts, Propositions, Offers to Purchase, Options, Options with Listing Clause, Affidavit of Real Estate Vendor, Purchase Agreements, Exchange Agreements, Bills of Sale, Leases [short form], and Contracts of Sale where such forms are approved by counsel, by filling in the blanks to show parties, descriptions and terms necessary to close the transaction.
A real estate broker may not make a separate charge for filling out such forms, and may not prepare such forms unless the broker is one of the parties.
The counsel required to approve the standardized forms may be lawyers selected by the individual real estate broker or by the real estate board.
A real estate broker may not give advice or opinions as to the legal rights of the parties, as to the legal effect of instruments to accomplish specific purposes or as to the validity of title to real estate, and may not prepare reservations of life estates or any limited or conditional estates other than a direct present conveyance between the parties effective upon delivery.
A real estate broker in conferring with parties to obtain facts and information about their personal and property status, other than what information is necessary to fill out the standardized forms, is engaging in the unauthorized practice of law.
Concurrence. The concurrence felt that the bar association should not have brought the lawsuit and should have left well enough alone. The public’s image of the bar association is not enhanced by such litigation. The concurrence notes that non-legal professionals are authorized to represent clients in certain circumstances and that the American Bar Association, which intervened here, should be protecting lawyers in other circumstances.

Discussion.

The limitations placed on real estate brokers by the court seem reasonable. As the court pointed out, many of these types of transactions have gravity, insofar as life savings or years of future income is involved.