FACTS: A broker is working with a seller who is open to selling their home with seller carryback financing.  The broker asked AI for advice on the best way to facilitate the seller’s wishes and was told the seller should provide an Agreement for Sale to secure their loan and offered to create the document.

ISSUE: Can the Broker use an AI generated Agreement for Sale document to facilitate the sale to a potential buyer?

ANSWER: See Discussion.

DISCUSSION: Under Arizona law, a licensed real estate broker has the legal right to draft any instrument, including an Agreement for Sale,  incident to their representation of a client in a real estate transaction.  See Article 26 § 1 of the Arizona Constitution.  However, when doing so, the broker “also bear[s] the responsibility and duty of explaining to the persons involved the implications of these documents.  Failure to do so may constitute real estate malpractice.”  Morley v. J. Pagel Realty and Ins., 27 Ariz. App. 62, 550 P.2d 1104 (App. 1976).  Therefore, a broker should only provide a security instrument if they are confident it conforms with Arizona and federal law (including the Dodd-Frank Act)  and they can competently explain its legal ramifications.  Here, the broker appears to lack the knowledge and experience necessary to ensure the AI generated form is compliant with applicable law or be able to explain its legal rights and obligations to their client.  Legal counsel should be obtained.