by Phoenix attorney Christopher A. Combs, partner with Combs Law Group, P.C.

Question: After not passing the real estate exam the first two times, the third time was the charm. I am now an Arizona real estate licensee. Yippee! Even better, I have my first client. My brother is buying a home from a ” for sale by owner” seller. Neither the seller nor my brother have any real estate experience, and they will pay me $250 each to draft the purchase contract and other real estate documents. Can I do that? If I can, is $500 a fair price?

Answer: The drafting of real estate purchase contracts, loan documents, and similar documents has historically deemed to be the practice of law, and only lawyers could draft such documents. In 1963 Arizona voters overwhelmingly approved Article 26 of the Arizona Constitution which authorized a real estate licensee to draft such documents. The drafting of such documents, however, must be incidental to the real estate licensee being involved in the sale or leasing of real property. Furthermore, the real estate licensee cannot have a separate charge for the drafting of these documents. Therefore, if the seller and your brother had already agreed without your assistance on the material terms of the transaction such as sales price, you cannot now draft those documents for a fee of $500.