Why Your Realtor Shouldn’t Draft Your Contracts:

The Legal Risks of DIY Agreements in Colorado

In the fast-paced world of business and real estate deals, entrepreneurs often look for ways to cut costs and speed up transactions. One common shortcut? Asking realtors, consultants, or members of the local Facebook mom groups to draft your contracts instead of hiring a lawyer. While this might seem like a cost-effective solution, it’s actually a legal landmine.

Under Colorado law, contract drafting is the practice of law. That means when a non-lawyer—such as a real estate agent—drafts a custom contract for you, they are engaging in the unlicensed practice of law, which is not only illegal but also puts your deal at serious risk. Here’s why hiring an attorney for contract drafting isn’t just a good idea—it’s essential.

The Unlicensed Practice of Law: What’s the Big Deal?

Colorado law is clear: only licensed attorneys can draft contracts that create binding legal obligations. While realtors are trained in facilitating real estate transactions and utilizing the Colorado Real Estate Commission form contracts, they are not trained to:

• Identify and mitigate legal risks unique to your deal

• Customize contracts to protect your specific interests

• Provide legal advice on contract terms, obligations, or potential disputes

  
  

When a non-lawyer attempts to draft a contract, they are not held to the same professional and ethical standards as an attorney. If something goes wrong, you may not have the legal recourse you need to fix it. And I am not throwing shade on the realtors – I work with fantastic brokers and realtors every day, and I was a Florida realtor years ago!

Why You Should Work with a Lawyer—And Why It’s Not as Scary as You Think

Entrepreneurs and business owners sometimes avoid hiring lawyers due to concerns about cost, complexity, or intimidation. But here’s the truth: we’re not all outrageously expensive, we’re not here to make things harder, and we are not – I REPEAT – we are NOT here to kill the deal. In fact, the good business lawyers at RZA Legal are problem solvers who helps prevent costly mistakes and unnecessary headaches.

1. Lawyers Protect Your Interests, Not Just Close the Deal

Realtors are focused on getting a transaction across the finish line due in part because their payday is tied to closing the deal. A transactional attorney’s job is to protect you from future disputes and liabilities. Whether it’s a real estate purchase, a business acquisition, or a joint venture agreement, having an attorney ensures the contract works for you—not just for the deal.

2. One Size Does NOT Fit All

Pre-made or standard contracts may seem convenient, but they often fail to address key details that could make or break your deal. A well-drafted contract:

• Anticipates potential disputes

• Clarifies rights and obligations

• Protects against unforeseen risks

  
  

So often we have potential clients come to us with a draft contract, shareholders agreement, letter of intent or some other contract prepared from an online template or ChatGPT (we can tell right away).  Sometimes those agreements are already signed, which is heartbreaking because once the agreement is signed, it is typically legally binding with some exceptions and no amount of good legal advice after the fact can change the terms of that deal.

If the contract isn’t signed when the client comes to us, after gathering their goals and concerns for the deal, we typically redline the agreement, and usually the client replies with something like “wow, I didn’t even think to address that issue” (like who pays escrow fees, or when the deal can be terminated for cause, or which documents to request for due diligence when purchasing a business).

Some law firms use automations and templates to churn out a high volume of contracts for their clients – theses contracts typically are not tailored for the specific deal the client has in mind, but often times the client doesn’t know any better and assumes that all contracts have to include some language that doesn’t apply or that they shouldn’t understand some of the contract language and chalk it up to “legalese.”  Many times, these law firms start with long, technical templates because they know it will take their lawyers many turns back and forth, allowing them to drive up billable hours and drain client retainer accounts.

At RZA Legal, we are a small business and truly despise spending more time on drafting than is absolutely necessary.  We believe in drafting contracts specific to our client’s needs and using terminology that the parties can understand.

3. The Cost of a Transactional Lawyer is Far Less Than the Cost of a Lawsuit

Think hiring a lawyer to draft your contracts is expensive?

Try dealing with a legal dispute caused by a poorly drafted contract. Litigation costs, lost deals, and reputation damage can all result from an agreement that wasn’t properly structured. Investing in a solid contract upfront saves money in the long run. Our retainers are typically around $3,000-$5,000 (or lower for flat fee projects, ranging from $400-$2500).  A litigation retainer if you are in a dispute over a poorly drafted contract starts at $5,000.

Pro Tip: Budget in legal representation to your deal.  After analyzing 10 years of business transactions we have worked on, our legal fee is typically between 0.5% and 2% of a deal.

4. Lawyers Work on Deals of All Sizes

Not every business deal involves millions of dollars. Whether you’re negotiating buying a small business or securing a commercial or investment real estate, the attorneys at RZA Legal handle contracts of all scopes and sizes. We offer flat-fee or reasonably structured pricing, making legal assistance more accessible than you might think.

Final Takeaway: Don’t Cut Corners on Contracts

Contracts are the backbone of any successful business deal. While it might be tempting to have a realtor, consultant, or even an online template handle your contract needs, only a licensed attorney can ensure your contract is legally sound and tailored to your best interests.

“An ounce of prevention is worth a pound of cure.” Benjamin Franklin, 1735

Looking for a lawyer who understands business, real estate, and the entrepreneurial mindset? Let’s talk about how to protect your next deal.

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