The Oklahoma Real Estate Commission’s Forms Committee and its Impact upon the Legal Practitioner
By John Munkacsy

The Oklahoma Real Estate Commission has authority over the licensing and regulation of real estate licensees.1 In addition, it has been authorized by statute2 to create an Oklahoma Real Estate Contract Form Committee by rule which will be required to draft and revise residential real estate purchase contracts and any related addenda for voluntary use by real estate licensees. Effective Jan. 1, 2008, the commission’s authority was expanded authorizing the committee to develop purchase or lease contracts for all facets of real estate, i.e., commercial, agricultural, property management, etc.3 The Oklahoma Real Estate Commission (OREC) has promulgated a rule4 establishing the Contract Forms Committee.

The Forms Committee is composed of 11 members, three appointed by OREC, three appointed by the Oklahoma Bar Association and five appointed by the Oklahoma Association of Realtors Inc. (the realtors’ trade association). The currently serving attorneys appointed by the president of the Oklahoma Bar Association are Robert J. Nichols, Tulsa; R. Victor Kennemer, Wewoka; and the author.

The Forms Committee has been in existence and hard at work for several years and has developed several standardized contracts (residential sales, vacant land, new home construction) for the use of the licensees, along with many other related forms that are typically used in residential real estate transactions. The forms have been approved by OREC and can be viewed at the OREC Web site.5 By all indications, the use of these approved forms by real estate licensees is prevalent throughout the state. The Forms Committee regularly reviews comments from the field and considers whether revisions would be useful or appropriate.

The purpose of this discussion is to acquaint the members of the Oklahoma Bar Association with the Forms Committee, its purpose and how the development of these forms may relate to the legal practitioner.

Among the purposes served by the implementation of the standardized forms are to create more uniformity, reduce the need for additional drafting by a licensee, and offer a greater degree of protection to the consumer. Superimposed upon this is the fact that the real estate industry in Oklahoma has transitioned from laboring under the law of agency (the subject of much difficulty in the way that the real estate broker has traditionally operated) to what is commonly referred to as “transaction brokerage” as defined and implemented by the Brokers’ Relationships Act.6 This regimen was enabled in 1999 and effective Nov. 1, 2000, and replaces the law of agency as it applies to a real estate broker’s relationship with the customer.7 The implications of this change are beyond the scope of this article and are significant.

The modern residential real estate transaction is more complex in many ways than the same transaction of 30 or 40 years ago. In addition to the buyer, seller and brokers being involved, there are mortgage loan originators, primary and secondary mortgage lenders, real estate appraisers, home inspectors, abstract companies, title insurers, termite inspectors and often others. Additional complexities involve seller disclosure requirements and buyer due diligence. Home inspectors are now licensed and regulated by statute.8 The typical real estate licensee is in relationship to these many players and guides the seller and/or buyer through the maze.

Just the number of relationships that through the course of the transaction arise briefly and disappear, make the case of a process better suited to the real estate licensee than to the attorney. Few attorneys have established similar relationships. The role as developed has become a traditional part of the service rendered and no longer is simply one of bringing a willing buyer and a willing seller together. That formula is long gone. The practicing bar left the arena years ago for one reason or another, so for the most part this process has defaulted to the licensee. Now, and unfairly, the attorney is sometimes viewed as an impediment rather than a facilitator. Despite the occasional grumbling among lawyers about real estate licensees engaging in the unauthorized practice of law, it does not appear likely that the practicing bar is willing to reclaim this area of practice, even limited to drafting contracts or reviewing the forms and documents. Too often, the lawyer, unlike the licensee, doesn’t appear willing to remain in direct and constant contact with the buyer or seller client or to establish the necessary relationships among the other services that play a part in the typical transaction. Furthermore, the contract is often executed away from the broker’s professional offices, perhaps at the home of the parties with the licensee there and assisting.

The public appears to be well conditioned to this process of the typical residential real estate sale transaction and the role of the real estate licensee. Within this process the consumer is better served with the use by the real estate licensees of the universal, standardized forms developed by the Forms Committee and approved for use by OREC.

1. 59 O.S. ‘858-101, et seq.
2. 59 O.S. ‘858-208(14)
3. See OSCN reference to above citation.
4. Rule 605 ‘1-1-4, Oklahoma Real Estate Commission Rules.
5. www.orec.ok.gov
6. 59 O.S. ‘858-351 through Section 363.
7. 59 O.S. ‘858-360.
8. 59 O.S. ‘858-621, et seq.

About The Author

The Oklahoma Real Estate Commission’s Forms Committee and its Impact upon the Legal Practitioner
Published 79 OBJ 7 (February 9, 2008)