Behind the Lease: How Housing Providers Can Avoid Legal Practice
Without a License

By: Morgan Dunn – Georgia and South Carolina Licensed Attorney with Brownlee Whitlow & Praet, PLLC

 
      In general, every state has a statute which prohibits the unauthorized practice of law (“UPL”). UPL statutes prohibit people and entities from practicing law without appropriate licensure. This helps to ensure public confidence and trust in lawyers
and the legal system. UPL can be punishable by criminal and/or civil charges.

    Ultimately the scope of the UPL depends on the definition of the “practice of law.” The practice of law is defined in each state’s statute but generally involves performing any legal service for another person, preparing legal documents,
representing another person in a court or administrative tribunal, or offering legal advice or giving an opinion on the legal rights of a person or entity. Legal documents can be anything such as deeds, mortgages, wills, and even leases.

      Paralegals, notaries, title companies, online self-help legal services or artificial intelligence, law students, even licensed
attorneys are most often found to be engaged in the UPL. One of the most common ways in which we see UPL is when an attorney who is licensed in one state attempts to represent or negotiate on behalf of a resident located in a different state. There are several ways in which UPL can arise in the context of rental housing providers, such as:

• • • • Drafting or Modifying Lease Agreements: If a housing provider drafts, reviews, or makes significant
        changes to lease agreements or addenda without the involvement of an attorney, they may be engaging in the UPL. This is because the legal rights of either party could be affected. Lease documents often involve complex legal issues, and altering these terms could require legal expertise. Alternatively, if the adjustment(s) to the lease terms simply involve dates, rental rates, late fees, etc., that is unlikely to be considered the UPL
        but rather just the normal course of job duties of a housing provider. If ever in doubt, ask an attorney to review the lease documents when any substantive changes are made.
      • Eviction Process Without Legal Counsel: When a housing provider attempts to handle the eviction
        process on their own, such as drafting and serving eviction notices, filing court documents, or representing
        themselves in eviction court, they may be at risk of practicing law without a license. However, many states have specific statutes authorizing management companies or ownership to handle eviction proceedings.
        In South Carolina, South Carolina Code Section 27-40-710 allows a housing provider to go to court (magistrate court) and provides that someone within the company can appear to represent the interests
        of the company during an eviction proceeding with the completion of a non-lawyer authorization form.
        You can review an example of the form the court would have a housing provider appearing in court sign,
        the Authorization for Non-Lawyer Representative here. The scope of this representation is strictly limited to
        an eviction proceeding in magistrate court. If a resident appeals an eviction or the housing provider
        otherwise litigates in South Carolina Circuit Court, the housing provider must retain counsel (i.e. hire
        a lawyer). This Notwithstanding those statutory allowances, the eviction process is governed by specific legal procedures, and improper handling can result in violations of tenant rights.
      • Providing Legal Advice to Residents: It can be easy to cross the line into unauthorized practice by
        offering legal advice to residents about their rights, such as how to contest an eviction or request a rent reduction. When speaking with residents, be sure not to provide specific advice on anything involving litigation (or anything that could become litigation). If an eviction or other litigation was filed with an
        attorney, you should always advise the resident to contact that attorney if you are uncomfortable speaking with them regarding the eviction or other litigation. Housing providers who interpret local, state, or federal housing laws (such as fair housing laws or rent control ordinances) on behalf of tenants or other parties (i.e. providing residents with advice on how to navigate the legal proceedings such as evictions and appeals) without being licensed attorneys may be committing the unauthorized practice of law. Legal representation requires professional legal knowledge, and non-attorneys should avoid providing interpretations of the law. Only licensed attorneys are authorized to provide legal advice (to residents and housing providers alike),
        and non-attorneys providing such advice could be violating UPL rules. You can always provide residents with
        a list of resources and/or contact information for community services who may able to represent them or discuss their case.
      • Negotiating Settlement Agreements: If housing providers negotiate settlement terms in a legal dispute without legal representation that involves the rights of residents and/or others, they could risk being
        engaged in UPL. While negotiating a settlement agreement with residents, individuals representing the management company and/or ownership are often considered to have authority and be acting as an agent
        of the management company and/or ownership. That is not the UPL because there is an employee/agency relationship. What would potentially be the UPL is if housing providers offer any advice to the residents
        about how the settlement agreement (or lease documents for that matter) could impact the resident’s individual rights and obligations. Something to watch out for would be if the resident is asking a lot of questions about specific provisions of the settlement agreement and specifically asks the housing provider
        to answer questions such as “What does this mean for me?” or “How will signing this agreement impact my ability to sue you later?” and things of that nature. Providing an answer to these and similar questions could result in the housing provider being engaged in the UPL. Negotiating and advising as to the impact of legal terms, including those that affect the legal rights of either party, generally requires a licensed attorney.

     
      In each of these cases, housing providers should consult with an attorney to ensure they are not inadvertently
engaging in activities that require a law license. Contact us if you have a question about UPL or any of the circumstances outlined above.

     
*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information in this article is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. Viewers of this material should contact their attorney to obtain advice with respect to any particular legal matter. No viewer of this material should act or refrain from acting on the basis of information in this presentation without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  Use of, and access to, this article does not create an attorney-client relationship between the reader and Brownlee Whitlow & Praet, PLLC or any contributing law firms. All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.