In 1981 the Supreme Court of Arkansas addressed whether activities by a real estate broker constituted the unauthorized practice of law. The court held that it was in the public interest to permit brokers to fill in the blanks of certain standardized, printed forms in connection with simple real estate transactions, provided the forms had been approved by an attorney.
The Pope County Bar Association (PCBA) sued to enjoin Pope County real estate brokers from completing certain instruments involving real estate transactions without consulting an attorney. PCBA contended that these activities were an unauthorized practice of law. The brokers and the Arkansas Realtors Association, which intervened, denied the acts constituted the practice of law. The chancery court denied the injunction and allowed brokers to fill in the blanks on certain instruments, provided they met several limitations. Both sides appealed.
The Court stated that the “ultimate issue in this case is not so much whether [brokers] are practicing law when filling out these routine forms but whether it is in the best interest of the public to allow them to do so.” The court used case law from Arkansas and Colorado to determine that the public would be best served by allowing brokers to fill in the blanks on instruments involving “simple real estate transactions.” The court defined the term as those transactions involving the conveyance of a fee simple absolute and excluding easements, rights of way, future or contingent interests, remainders, and other limited interests. It stated that the latter transactions are not routine in comparison with the other transactions and that the likelihood of error when prepared by a layman is appreciably greater. Further, by making this distinction, the court noted that it (1) protects the public interest by excluding the more complicated transactions, and (2) gives adequate notice to both the brokers and the public of the upper limits of a broker's authority to act in such matters. The court affirmed the chancellor's findings which are paraphrased below.
(1) A broker can fill in the blanks of certain standardized, printed forms in connection with simple real estate transactions, provided the forms had been previously prepared by a lawyer.
(2) A broker may use standard warranty deeds, quitclaim deeds, release deeds, bills of sale, lease agreements, and mortgages with power of sale under certain specific restrictions:
(a) That the person for whom the broker is acting has declined to employ a lawyer to prepare the necessary instruments and has authorized the broker to do so;
(b) That the forms are approved by a lawyer either before or after the blanks are filled in but prior to delivery to the person for whom the broker is acting;
(c) That the forms shall not be used for other than simple real estate transactions which arise in the usual course of the broker's business;
(d) That the forms shall be used only in connection with a transaction actually handled by such brokers as a broker;
(e) That the broker shall make no charge for filling in the blanks; and
(f) That the broker shall not give legal advice or opinions as to the legal rights of the parties, as to the legal effects of instruments to accomplish specific purposes or as to the validity of title to real estate.
The court refused to expand its holding to several abstract and title companies which petitioned to have the same restrictions applied to them. The court noted that these companies did not become parties to the suit merely by filing a brief and would not be bound by the decree.
Pope County Bar Association v. Suggs, 274 Ark. 250, 624 S.W.2d 828 (1981).