Is a licensed real estate broker allowed to prepare a warranty deed once a valid purchase agreement is drawn up?

The correct answer is that a licensed real estate broker is not allowed to prepare a warranty deed because it is considered practicing law. In South Dakota, as in many other states, the preparation of legal documents related to real estate transactions falls under the practice of law. Only licensed attorneys are authorized to draft documents like warranty deeds because they require a certain level of legal understanding and expertise to ensure that the documents comply with state laws and effectively protect the interests of the parties involved.

When a broker prepares a legal document without being a licensed attorney, they may inadvertently create issues related to validity, legal rights, and liabilities. Therefore, even if both parties agree or if the broker feels capable of drafting the deed correctly, engaging in this practice could lead to unauthorized practice of law claims against the broker.

This highlights the significance of keeping legal and real estate services distinct, as it helps protect both the clients and the professionals involved.