Seller's Atty calls to tell me I can't....... - Posted by Mike (IN)

Posted by eirc on May 05, 2004 at 19:06:20:

I am not disputing that most fill-in-the-blank forms do not require an attorney, even for a business entity. In this post, I was merely noting that there may be an argument, albeit a week one at that, that preparing certain documents in certain states by the principal of a business entity may run afoul with the practice of law. Do they in this instance? I don’t know, but it doesn’t sound like it.

The attorney in the original post appeared to be making the distinction, based on my reading, between an individual and an entity. Perhaps he was claiming, rather, that no one but an attorney could draft those particular forms/agreements. I don’t know what the law is in that state, but I have serious doubts about the later. I conceptually understand the former, but don’t necessarily agree with his interpretation.

Seller’s Atty calls to tell me I can’t… - Posted by Mike (IN)

Posted by Mike (IN) on May 04, 2004 at 15:02:33:

I purchased a property last week where the seller agreed to hold a mortgage for 24mos on a property he owned outright. We did all of the paperwork and the Seller went to his Atty after the fact.

Seller’s Atty calls me today to tell me;

  1. By me preparing the documents (mortgage, deed, trust, etc) I am in trouble because I am “practicing law” and do not have the right to do so.
  2. The deed is in the name of a trust which my company is the beneficiary and the mortgage has my company as the obligee and this is all wrong. Says this is incorrect & again I can’t personally prepare these documents.
  3. My “Bill of Sale” shows that I purchased the fridge, washer & dryer for $1 and this is not a fair price
  4. Seller paid me for 2003 taxes & proration for 2004 and wants to know what I have done with the money. Says I need to show where I have paid the taxes now even though they are not yet due.
  5. Basically tells me that I need to come to his office to “void” the deal because everything I have done is not legal. Reads me the riot act for not being a licensed real estate agent, atty, and everything else! Tells me that if I don’t come to his office to revearse the transaction, there will be legal action taken.

All of my forms are William Bronchicks.

Is there any truth to any of this?

If the seller just wants his house back, no big deal…he can have it!

Thanks
Mike

I wish I had a dime for every dimwitted atty - Posted by William Bronchick

Posted by William Bronchick on May 06, 2004 at 09:03:51:

  1. By me preparing the documents (mortgage, deed, trust, etc) I am in trouble because I am “practicing law” and do not have the right to do so.

–> Wrong. Anyone can prepar legal documents for their own behalf

  1. The deed is in the name of a trust which my company is the beneficiary and the mortgage has my company as the obligee and this is all wrong.

–> The obligee should be the seller. The obligor is the trust.

  1. My “Bill of Sale” shows that I purchased the fridge, washer & dryer for $1 and this is not a fair price

–> So absurd, it does not even require a comment

  1. Seller paid me for 2003 taxes & proration for 2004 and wants to know what I have done with the money. Says I need to show where I have paid the taxes now even though they are not yet due.

–> Also absurd

  1. Basically tells me that I need to come to his office to “void” the deal because everything I have done is not legal. Reads me the riot act for not being a licensed real estate agent, atty, and everything else! Tells me that if I don’t come to his office to revearse the transaction, there will be legal action taken.

–> I love these attorneys who threaten buyers with, “my client is hereby voiding the transaction!” Yeah, as if a seller can “magically” undo a deed that was signed, delivered & recorded. I’ve heard this “Houdini” routine a dozen times. No seller, nor his lawyer, can reverse or “void” a transaction. He can file a lawsuit asking a judge to void it, which is a 100 to 1 shot.

Update… - Posted by Mike (IN)

Posted by Mike (IN) on May 05, 2004 at 15:41:46:

Well I called the seller’s atty today to cancel the appointment to sign the doc’s to revearse the transaction. I told him I needed him to fax me all of the documents he was wanting me to sign & that I would be reviewing the entire situation with MY Attorney and let him handle from here on. Seller’s atty says “Well you better do it fast because we’re not waiting around before we take this thing to court”. I said that’s fine, do what you need to do and I’ll have my atty handle everything.

I then received a call from the Seller. He called to ask me if I had paid the tax bill yet. I said I would be paying it this week and it’s due by May 10th. I then told him about my conversations with his attorney and the riot act he read me and threat of suit if I did not come to his office to revearse the transaction. Seller was shocked. Says he only went to the attorney (after the fact) to make sure that our agreements, etc were legitimate & than he was OK. He only met with the atty for 15 minutes before he escorted him to the door. Seller said he had no intentions for wanting to revearse the deal. Evidently his atty just took things in his own hands to have things revearsed, etc & to tear into me about me not knowing what I’m doing. Seller tells me he will call his atty and stop the process. In fact, I just received a fax from his atty stating that fact.

I still met with my attorney today as scheduled just to have my doc’s reviewed. He reveiwed my general forms in the past, but I wanted to have him look at my completed doc’s, etc. He had me change a couple of things but nothing that would prevent us from prevailing in court. He said the seller & his atty had no case & I had nothing to worry about. What a relief to have a good atty on your side! We also discussed how we would handle future closings. As I mentioned, I have always done “Kitchen Table” closings. My atty thinks that is still fine but with a few changes. I will complete my purchase paperwork and give to him to review everything before closing. He will also prepare the deed because in Indiana, you can only prepare the deed if you own the subject property or you are an atty. Another alternative would be to have the Seller listed on the deed as the person who prepared (if willing). Still, I will have my atty prepare the deed anyway.

Lessons Learned:

  1. Don’t take short cuts and treat your business as such.
  2. Have a good attorney (before a problem arises). Luckily I did!
  3. Don’t back down to threats from attorneys. As long as you know that what you did was legal, honest, and fairly negotiated. Just have your attorney handel it for you.

A special thanks to all of you for your support & feedback. It was nice to tell the sellers attorney I would not be showing up to his office and that my attorney would be picking things up from here. It was a thrill to see him back pedal a little and eventially have the seller call him off.

Mike (IN)

But what’s YOUR lawyer say? - Posted by John Merchant

Posted by John Merchant on May 05, 2004 at 14:29:51:

Phooey! The guy’s just trying to intimidate you, and you need do nothing, really.

But if he calls again just tell him he’ll need to put all his problems in writing to you, which you’ll then take to your lawyers…which you’ll name, as the biggest law firm in your area, but you can’t yet tell him which of their RE & contract specialists will be handling your side of the coming lawsuit.

This will probably clue him in that you’re not going to be rolled over so easily, and you’ll likely have no more problems from seller or the lawyer.

If S doesn’t follow through, you have a very good suit against defaulting seller for his failure to “specifically perform” that contract, including attorney’s fees & court costs…all of which will probably discourage S from playing games with you.

And of course you should be making an appointment with your lawyer right now so he/she’s standing by for whatever he/she needs to do for you.

Re: Seller’s Atty calls to tell me I can’t… - Posted by eric

Posted by eric on May 05, 2004 at 10:47:34:

For the most part, the attorney is just trying to intimidate you.

The only portion of these that may (and I emphasise may) is with regard to filling out the documents and “practicing law” without a license. First, this does not affect the validity of the documents themselves. If at all, it can only subject you to civil and criminal penalties.

An individual can write their own contracts, prepare documents, etc. without “practicing law.” A company, on the otherhand (other than sole proprietorship), cannot represent itself. So, even though a corp or an LLC may be a single member entity, the sole principal cannot represent the entity. This must be done by an attorney. So, the filling out of some of the transactional documents MAY be considered “practicing law.”

As I understand it, the attorney you reference is making this argument as to the “un-licensed practice of law.” This argument has some merit, but is a collateral issue and won’t affect the validity of the transaction documents themselves. This is one of the down sides of forming business entities for protection, as you need to use lawyers for a lot of the mundane tasks that one representing themselves could normally do.

In sum, this guy is trying to bully you. Stand your ground. However, you may want to spend a few bucks and talk to an attorney of your own.

Re: Seller’s Atty calls to tell me I can’t… - Posted by AmyliM

Posted by AmyliM on May 05, 2004 at 09:39:03:

What you did is NOT the “unauthorized practice of law.” This principle prevents non-attorneys from representing third parties and advising such parties on the law and legal principles. Any principal/business person can choose not to have an attorney and to put together and paper a deal for himself and his affilaited entities without a lawyer. Your seller also chose to sign a deal without first consulting an attorney- he cannot now void a deal based on this principle.

I do not know the details, but the reasons this attorney has set forth do not seem like something you need to worry about from a legal perspective.

Re: Seller’s Atty calls to tell me I can’t… - Posted by Frank Chin

Posted by Frank Chin on May 05, 2004 at 07:25:13:

Mike:

In my younger days, I’ve negotiated business deals, RE deals, then have the other guy say “let me check with my lawyer”. Afterwards, the lawyer would always re-negotiate the whole deal, blaming me, and the other guy for not knowing what we’re doing. Of course, since he’s paying, unless I walk away, the changes is always to his benefit.

I recall a deal where the seller was meekly staring at the floor while his attorney was giving the “you don’t know what you’re doing” speech. And when the attorney was done, the seller looked at me and said “I guess he’s right”. (referring to his attorney)

I’ve since learned to always have an attorney at my ready, as part of my team if you will, preferably an older guy, who can usually tell the other guy “I’ve done this and that for 50 years …”

The other thing I learned is in many cases, the cost of an attorney was minimal compared to the cost of the re-negotiated terms. If I were you, I get an attorney to tell this attorney the deal is legit.

I don’t know why you’re paying $1.00 for the appliances separately. When I buy my rentals, the P&S contract reads, purchase price includes “3 AC’s, 3 fridges, washer, dryer etc”. My guess is you’re buying the property with the appliances, otherwise, why would someone sell the stuff for $1.00 without the RE deal.

In fact, when the seller took a fridge after the sale in one deal, I countersued for it when he sued me in a small claims case, and I was upheld. He claimed I gave him the OK in a phone conversation, and I told the judge that RE contracts cannot be orally amended, and this P&S contract drafted by the seller’s attorney specifically says “the contract can only be modified in writing”. I said to the judge “I PAID for 3 fridges, and I only got two”. He nodded.

My take is, if this is a real good deal for you, instead of saying “he can keep the house”, just spend a few bucks on an attorney.

Frank Chin

Re: Seller’s Atty calls to tell me I can’t… - Posted by JohnBoy

Posted by JohnBoy on May 04, 2004 at 23:44:23:

  1. The deed is in the name of a trust which my company is the beneficiary and the mortgage has my company as the obligee and this is all wrong. Says this is incorrect & again I can’t personally prepare these documents.

This sounds all correct to me! There is nothing wrong with putting a property into a trust. It is legal!

There is nothing wrong with a company being the beneficiary of a trust. It is legal!

There is nothing wrong with a company being the obligee for a note. It is legal!

What he is saying is…wait a second here! This is dumb on the seller’s part! The seller should have made you PERSONALLY liable for all this and not let you do in a company name! Tuff Sh*t! It’s legal. Both parties agreed. Period!

  1. My “Bill of Sale” shows that I purchased the fridge, washer & dryer for $1 and this is not a fair price

Says who??? If both parties agree to a price then that is a fair price!

  1. Seller paid me for 2003 taxes & proration for 2004 and wants to know what I have done with the money. Says I need to show where I have paid the taxes now even though they are not yet due.

None of his business! All that matters is that the taxes are current!

  1. Basically tells me that I need to come to his office to “void” the deal because everything I have done is not legal. Reads me the riot act for not being a licensed real estate agent, atty, and everything else! Tells me that if I don’t come to his office to revearse the transaction, there will be legal action taken.

You do not need to be a licensed realtor to buy a property. You do not need to be an attorney to buy a property. You do not need to be everything else to buy a property. All you need to be is a person of legal age and sound mind to buy a property. No realtor, attorney or everthing else is required!

As long as all the docs are in order and if it were me I would tell this idiot to go pound sand! I don’t give in to threats and intimidation. But that’s me. You might want to consult with your own attorney first.

BTW…if you can’t fill in these types of documents yourself as a principle to the transaction…then how can all your local office supplies sell these types of forms to the public where they can do this themselves???

Re: Seller’s Atty calls to tell me I can’t… - Posted by Tony-VA/NC

Posted by Tony-VA/NC on May 05, 2004 at 15:42:55:

I think we all agree that this is simple seller’s remorse expressed through intimidation tactics of the seller’s attorney.

I also understand where you are going with the fact that we as individuals cannot necessarily represent the “company” in court if it is a legal, separate entity. This certainly depends on the court and how close they stick to this rule and if objections are noted. For example, filing for evictions in may locales it is not unusual for the smaller courts to allow the individual to represent their company. But your point is well taken.

Where I would like to see further discussion is on your point of practicing law by filling out the documents. I would disagree here as filling out contracts by the authorized agent of a corporation is business as usual and not the practice of law. Every business completes contracts each day, usually by filling in the blanks but they do not have attorney’s “fill in the blanks” though they may or may not have had the attorney write/review the original, boiler plate document.

Lastly, let us not forget that the originator of these documents IS an attorney. Certainly the question of “well is he licensed in your state” might arise but as othes have noted, how many of the preformated, boiler plate contracts at the local bookstore are written by attorney’s in each state?

I do realize that the essence of the answer to the original poster is to stick to your guns, don’t be intimidated and realize that you are in business and an attorney of your own is a wise asset to have on your team.

Tony-VA/NC