Should Brokers Complete Note and Deed of Trust?

2 sets of male hands looking at legal documents with pen in hand

Have you ever been asked to complete a note and deed of trust? Recently a CRES-insured broker called our CRES ClaimPrevent® Hotline, because he was asked to complete a note and deed of trust for a client. The broker asked if it was proper to do so — and if the parties should sign a release of liability. 

Beyond Your Scope of Expertise

It’s good this broker asked. The broker is the escrow officer, but preparing a Deed of Trust or Promissory Note is beyond the escrow’s officer’s duties. Brokers should not prepare these documents, with or without a release. 

Beyond this specific situation, it’s important for brokers and agents to remember that they cannot give advice outside of their scope of expertise, including legal advice. It can get tricky. Clients trust you. They ask for your advice, and you want to help them out. It may look like:

  • Recommending trade or service people
  • Giving feedback about the neighborhood
  • Taking on responsibilities outside your realm
  • Answering tax questions
  • Taking on legal duties, such as preparing a deed of trust

The best way to deal with this kind of scope creep is to recommend that clients talk to the appropriate professional. If your client asks you for a recommendation, give several and note in writing that it is the client’s responsibility to choose somebody who suits their needs. In addition, make sure you are following best practices for referrals and taking steps to protect yourself when sharing information with clients. 

Completing Forms for a Client 

There are a number of forms that a real estate professional should never complete FOR your client, including:

  • Sellers Disclosures of property condition
  • List of items excluded from the sale
  • Mortgage loan application (unless you are a mortgage broker)
  • Data sheet to verify identity and prepare deed

You may think you’re doing your client a favor by completing these forms. Maybe you think you have enough information to complete them. In reality, you’re putting both your client and yourself at risk.

In each of these cases, you are completing information that could cause a lawsuit if the information is inaccurate or incomplete. So don’t take that risk. Advise your clients that you’re happy to walk them through any of these forms — but they must be the one to complete the information.

When in Doubt, Call Your CRES Legal Team

If you’re worried about liability for any reason, wouldn’t it be nice to know who to call? CRES clients can call the CRES ClaimPrevent® Hotline 7 days a week. Clients receive a guaranteed response within 4 hours or next business day, with recommendations confirmed in writing.

Have you ever been asked to do something outside your scope?

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published December 18, 2019

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