Is Short Sale Negotiating the Unlawful Practice of Law

On February 11th, 2011, there will be a Public hearing to discuss whether or not conducting short sale negotiations for a third party is considered the “Unlawful Practice of Law” (UPL). The subcommittee for the Real Property, Probate, & Trust Law Section of the Florida Bar extensively discussed the benefits and detriments of having a nonlawyer participate in a short sale and when it might become the unlawful practice of law. Chair, Brian J. Felcoski responded with the following opinion (which may or may not form the basis for any conclusions that might be reached by the Florida Bar):

“— A non-lawyer who assists a property owner in performing the following in connection with a short sale transaction is not practicing law: fact finding, information and documents gathering and transmittal of the information and documentation to the property owner’s lender(s) to facilitate the approval of a short sale transaction (emphasis added).

— A non-lawyer who assists a property owner in performing the following in connection with a short sale transaction is practicing law: evaluation and/or giving an opinion as to the legal significance of any document, including, without limitation, documents submitted by the property owner to the lender or documents from the lender relating to the terms of the short sale approval of deficiency; providing advice regarding the legal ramifications of a short sale (with or without deficiency waiver), foreclosure, bankruptcy, or any legal recourse (emphasis added).

— A non-lawyer who assists a property owner in negotiating the terms of a short sale approval may or may not be practicing law pending on the particular facts. Generally, if the negotiating involves evaluating, advising, or giving a legal opinion, then such negotiating is practicing law. Generally, if the negotiating is simply the transmittal of information from one party to the other without evaluating, advising or opining, then the negotiating is not the practice of law. “

If you would like to attend this public meeting on Unlicensed Practice of Law, it will be held at the Sheraton Orlando Downtown, 400 West Livingston St. Orlando, FL 32801, at 10:30 a.m. Berlin Patten is dedicated to protecting the parties involved in short sale transactions and suggest seeking legal advice before handling a short sale transaction. If you have questions or would like to discuss the issue of UPL, please contact our office at 941-954-9991

The article regarding FAO #2011-1; Nonlawyer assistance in Short Sale Transactions, published by the Florida Bar can be found at http://www.RPPTL.org

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