On April 4, 2017, the Wyoming Supreme Court issued an Order Approving Consent Agreement confirming and adopting the Wyoming State Bar Unauthorized Practice of Law Committee’s (“Committee”) Consent Agreement in the matter of Razor City Realty, Kevin Beck (Responsible Broker), and Richard Kistler (Associate Broker). The Order and Consent Agreement provides guidance to the Wyoming real estate profession regarding what constitutes the unauthorized practice of law such that real estate professionals may be potentially liable for violating the Wyoming State Bar’s rules prohibiting the unauthorized practice of law.
In June 2016, a computer store manager approached Razor City Realty (“RCR”) regarding RCR selling some of the store’s assets. RCR and the manager executed an Exclusive Right to Sell Listing Contract—WAR Form 104-1105. One month later, in August 2016, a buyer approached RCR, about purchasing the computer store’s assets. Subsequently, RCR prepared a Contract to Buy and Sell Real Estate—WAR Form 310-0411, which RCR significantly modified by striking out provisions related to real estate. The computer store accepted the buyer’s offer and signed the modified Contract to Buy and Sell. Also, as part of the sale, RCR gave the buyer a Real Estate Brokerage Disclosure as well as a Notice to Purchasers, informing the buyer of his right to consult with a licensed professional, such as an attorney, in purchasing the store’s assets. RCR earned a 5% commission fee on the sale.
The Wyoming Rules Governing the Wyoming State Bar and the Authorized Practice of Law define the “practice of law” as providing any legal service, with or without compensation, including the drafting of documents. Rule 7(b). The Rules grant an exception for real estate professionals, licensed by the Wyoming Real Estate Commission (WREC), to perform “statutorily authorized” acts, even if such acts would otherwise constitute the “practice of law.” Rule 7(c)(3).
The Wyoming Real Estate Licensure Act, which governs the practice of real estate professionals, defines “real estate” to mean “leaseholds, as well as any other interest or estate in land, whether corporeal, incorporeal, freehold or nonfreehold, and whether the real estate is situated in this state or elsewhere but shall not apply to nor include mineral lands, rights, or leases.” Wyo. Stat. Ann. § 33-28-102(b)(xliv). The Act goes on to define “real estate activity” to include the following:
- sell, exchange, purchase, rent, manage, or lease real estate;
- offer to sell, exchange, purchase, rent, manage, or lease real estate;
- negotiate, offer, attempt or agree to negotiate the sale, exchange, purchase, rental or leasing of real estate;
- list, offer, attempt or agree to list real estate for sale, lease or exchange;
- auction, offer, attempt or agree to auction real estate;
- collect, offer, attempt or agree to collect rent for the use of real estate;
- advertise or hold himself out as being engaged in the business of buying, selling, exchanging, auctioning, renting or leasing real estate;
- engage in the business of charging an advance fee in connection with any contract undertaken to promote the sale, auction or lease of real estate either through its listing in a publication issued for that purpose or for referral of information concerning the real estate to brokers;
- buy, sell, offer to buy or sell or otherwise deal in options on real estate or improvements thereon;
- assist or direct in the procuring of prospects calculated to result in the sale, exchange, lease or rental of real estate;
- assist or direct in the negotiation of any transaction calculated or intended to result in the sale, exchange, lease or rental of real estate;
- deal in time shares; or
- provide a broker’s price opinion as provided in Wyo. Stat. Ann. § 33-28-125.
Wyo. Stat. Ann. § 33-28-102(b)(xlv).
The purchase and sale of the computer store’s assets, which was personal property, did not involve the purchase and sale of “real estate” or involve “real estate activity,” as defined by statute. As such, Razor City Realty’s involvement in the purchase and sale was not a “statutorily authorized” act and was found to constitute the unauthorized practice of law. Wyoming real estate professionals should anticipate continued interest by the Wyoming State Bar in activities that may fall outside the statutory definition of “real estate activity.”
If you have questions about this decision or how it might impact your business, please call Billie Addleman.