It may seem as if the Realtor and the attorney are in competition for the same customer, but there are differences in the way they perform their duties and responsibilities that can make them better allies than adversaries.

At least that is the belief of one Florida real estate attorney, David Slachter. He feels that the manner in which the real estate transaction is handled is slowly changing and that the future could include a scenario in which one party holds all the cards at closing. That person could be a lender, a broker, or ....an attorney. Assuming that the Realtor will be the center of the transaction is no longer practical for agents. Too many others are busy putting together transaction management business models that Slachter feels that agents and attorneys should learn to work together while they still can.

"If all of us presently in the business are perceived to be so greedy and self-serving that the public will start looking for a fresh alternative," warns Slachter. "and if all of the pieces that the real estate broker, mortgage broker, mortgage lender, and title agent can be managed by some third-party, then maybe we are all in trouble."

But many agents would rather crawl under a rock with a rattlesnake than work on a transaction with an attorney. And some attorneys feel the same way, particularly with the advent of transaction brokerage and designated agency. But those are perceptions that Slachter hopes to change in this exclusive interview with Agent News editor Blanche Evans.

B.E.: What is the biggest misconception Realtors have about working with lawyers?

D.S.: That lawyers are there only to break up deals. Every time we get involved there is going to be a problem because the perception is that attorneys have such large egos that we need to make our presence felt, and the only way to do that is to disrupt the transaction so we can become the saviors. It's stereotypical.

B.E.: What are lawyers supposed to do?

D.S.: The problem comes in the practice of law. There is a difference between an advocate and a counselor. An advocate lives in a "zero sum" world. When you add a plus or minus you get zero. It is win or lose. That is how an advocate works, they are fighting for you. You want to beat the other buy.

There is another whole side of the practice and that is counseling. One of our responsibilities under our ethical code is to counsel our clients on what they want, and what is right, proper, moral, and ethical. We have a duty to not only counsel them on the law, but what the right thing to do is. It is an important responsibility.

Real estate practitioners take that very seriously. As an attorney who does real estate, I get my satisfaction only in a win-win world. I don't get satisfaction in a win-lose situation. A real estate transaction should always be a win-win. Everyone should walk out happy. That is the ideal transaction.

B.E.: Wouldn't most people think lawyers are advocates?

D.S.: Yes. When they think of lawyers, they think of Johnny Cochran. The reason I spend so much time on this is that Realtors don't understand. The lawyers in the public eye are all advocates. You never see a front page article on counseling and that is because people want to hear about winners and losers. That's human nature.

One of my biggest challenges is to let everyone know I am there to help them. Once people understand, I am there to work as part of the team.

B.E.: Who do you represent in the transaction?

D.S.: I don't represent Realtors in the traditional sense. My practice is representing lenders. I also represent buyers and sellers.

B.E.: When do you enter the transaction?

D.S.: One of two scenarios when I am hired by a buyer or seller is before they sign the contract, or after. Most of the time they say I've signed this contract - now, what do I do? I prefer they come before they sign because the contract is the bible. The document is the glue of the transaction. It is very important as it has legal consequences for all the parties.

B.E.: If the agent can write the contract, why is there a need for an attorney?

D.S.: The contract has been created with workable language between the broker and the bar associations. We have language so we can minimize conflict. When a Realtor wants a contract executed we have worked out most problems beforehand. My strong preference is that every party have a real estate lawyer. Anyone who doesn't specialize in the real estate transaction should not touch it. They should consult an attorney to get what they want.

An agent has a conflict of interest with the client because they have an interest in getting the contract signed. They could make certain compromises to get people to sign. An attorney's first duty is to the client, to protect them. We only represent one party in the transaction. We are trained not to look at what is the best deal, but to ask what do you want and does this contract fulfill what you want to do?

A Realtor will look at the transaction from her perspective, is this a good deal, and the customer should sign.

I make sure that the buyer is signing what they really want to sign. Ninety-nine times out of 100 the Realtor does a good job and my job is more preventive medicine. We go into documents and inspections, and the biggest problem in Florida is zoning, inspections and permits. So much rebuilding was done after Andrew (Hurricane Andrew.) that a buyer could buy a defective house very easily.

B.E.: Who has what duties? What should the Realtor be responsible for and what should a real estate attorney be responsible for?

D.S.: Let the Realtor sell and let me counsel. That is the perfect arrangement. From the buyers perspective, I love the exclusive buyer agent because it is very clear whom they represent. Their job is to investigate the properties, talk to the customer and find out what they want, find the right house and negotiate a deal. I recommend that the Realtor draft the contract because they have a lot of disclosures that they need to give. I let them do that.

From there I review the contract before it is signed by anyone. An agent doesn't have a deal until there is a signature and a check. They are motivated to get the signature. To protect the customer, let the customer give it to me to review.

Again, Realtors are very good at what they do, but their weakness is in drafting legal terms. There is always a twist and turn, an inspection issue, or occupancy issue that Realtors try to resolve by typing an addendum, but they are jumping over the line. They are drafting legal documents using business terminology and that is the kiss of death because they draft things that aren't clear and are open to interpretation.

I can work with the Realtor on anything that has to be custom drafted. Let us do our job. Tell us what you want to do. I will draw it up in the proper language.

B.E.: But aren't Realtors used to addendums and changing some things on contracts? How can they get into trouble?

D.S.: Post document. Very often a Realtor will put in the contract that closing is August 31st but then they put a paragraph that sellers can remain until Oct. 15th. What does that mean? Is the seller going to pay rent? Pay a security deposit? Or they put in clauses like right to inspect - what does that mean? These are unclear provisions. There are precise addenda to handle these kinds of issues.

B.E.: What about real estate attorneys as closing agents? What can you offer an agent over a title company?

D.S.: We have all the benefits a title company provides, but we can provide the bonus of counseling. The title entity doesn't represent anyone but the underwriter. I represent the buyer on the contract and I perform all of the functions, document preparation, and handling the closing. I represent only one of the parties. Where Realtors get into conflict is they think title companies are cheaper, faster, and they can dictate to the title company. They bring the buyers. The seller is delivering documents, so the buyer needs more representation than the sellers do. An attorney makes sure that everything is done properly.

The other part of it is the affiliated business arrangement. The brokerages are getting so squeezed they are looking to get into the one-stop-shop to make more money in the transaction. But, what is the consequence for the consumers? Realtors should do what they do, and let us do what we do. If this doesn't get resolved, there is going to be a war. Real estate lawyers are looking into the possibility of going after the consumer and providing real estate brokers, lending and closing services. If a broker can start a mortgage and title company, why can't I do real estate and mortgages?

B.E.: Are you saying represent the buyer in all phases of the transaction?

D.S.: In Florida, as an attorney, I can practice real estate brokerage, mortgage brokerage and provide settlement services without any other licenses besides my license to practice law. We don't have the conflicts of interest.

Everybody is feeding business back and forth, I can get them (sellers) to list with Slachter and Associates and help you sell the property. I can go on the Internet, I can negotiate and I can get a mortgage loan taken care of, get them a wholesale closing rate. I don't want to crush the other industry. I am a closing agent. It (sales and loans) isn't what I want to do , but if I have to, I will.

The realities are forcing them and us to make a living - a one transaction coordinator - that is the way it will be. Brokers will disappear and agents will be hired as paralegals. There is no reason it can't be done. I don't want to get into a pissing contest with Realtors, but I would rather work with them than go to war with them. If they try to push me out of business, I have no choice to push back. I have no alternative but to go to the public and say why should you sign a transaction brokerage agreement where they don't represent you? Why should you pay 6%?

The walls are breaking down and everybody is starting to morph. I'm not sure how it is going to end up. The licensing structure is in our favor right now. Eventually one licensee will be able to do everything. I have no idea what that will be or what the training will be. My hope is that it will require a lot of investigation training. There is a lot of fiduciary responsibility to do this.

B.E.: What do you think will happen?

D.S.: In Florida there are a lot of classes, that don't teach you how to do things, you just memorize things to get a license. There needs to be training on how to be a counselor. Somebody is going to do it. Cendant is certainly trying to do it.

That is my vision. Put the pieces to work together as a team and stop fighting for control and who owns the client. I would love the consumer to get total exposure to the fees so that we are all forced to work together. No magic kickback. We need to change to adapt to that.

Published: August 12, 1999

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