Colorado Real Estate Commission - Can Letters of Intent be Drafted by Brokers?
Submitted by John Logan, NAIOP Colorado Legislative Affairs Chair
Here’s the Cliff Notes version of the issue: The Colorado
Real Estate Commission has five members. Two of the newer members are real
estate attorneys. They’ve both had experiences where letters of intent were
claimed by one side to be a binding contract and resulted in litigation. They
believe that brokers who write letters of intent may be engaged in the
unauthorized practice of law, and potentially only attorneys should be involved
in drafting Letters of Intent (LOI’s).
Almost 50 years ago the Colorado Supreme Court held that
while preparing real estate documents was the practice of law, the public
interest was served by allowing brokers to complete simple real estate
documents. That decision was (in part) brought about by the then relative
absence of lawyers in parts of Colorado, a factor one of the attorney members
of the commission pointed out.
NAIOP Colorado believes that properly drafted letters of
intent are important tools in commercial real estate transactions and can, and
should, be written by brokers. It is important both for the speed of the
transaction and to keep costs down that deal point parameters be set out by
those closest to the market. It's also important to note that the Commission
has never had a complaint against a broker regarding a letter of intent.