Im a licensed broker in Illinois and I have facilitated/negotiated at least 250 short sales personally over the last 7 years. During attorney review on one of my short sales recently, the buyers attorney sent a letter to the sellers attorney stating that only a licensed attorney should be negotiating the short sale and if anyone else does, that is an "Unlawful practice of law". This is the first time anything like this has occurred with an opposing attorney. Has anyone else ever experienced this? Our position is that I am entering docs in equator, thus facilitating the short sale, but reporting to the sellers attorney any response from the bank.  Thank you!

Views: 347

Reply to This

Replies to This Discussion

Just some attorney trying to get the SS business, and charge for it. In most jurisdictions you have no issues unless you are charging an additional fee above and beyond the RE commission. If so, state law will dictate. Some would require you to be a licensed MLO.

Thanks for your reply Wayne!

You could call your state legal hotline in Illinois and tell them what this attorney said. I don't see how your uploading documents into Equator and relaying what is said to your seller constitutes practicing law.

Brian-

I am an Illinois Real Estate Attorney.  I can tell you that there has been a recent push to make short sale negotiation by anybody else other than an attorney a possible unauthorized practice of law.  Personally, I don't see how completing tasks and uploading documents into Equator is the unlawful practice of law.  I think where agents could get into trouble is if the negotiate a short sale with a cash contribution, promissory note or a lien release only deal.  I feel that agents could get into trouble if an angry short sale seller wanted to pursue a legal matter.

That being said, there is no reason for you to take on the headaches of short sale negotiation.  My office negotiates all short sales in house.  We don't charge the client any up front fees.  Short sale lenders generally approve attorney fees in Illinois because we are a state that closes with attorneys. 

If you are nervous about the possible risk, I would be more than happy to speak to you.

Robin Kramer

Kramer and Herbeck

Brian I agree!  If a short sale is a "headache" then why would the attorney want to take on the negotiation.  A good short sale agent can and will have a better success rate than an attorney will any day

:)

it depends on if you tick a bank off enough to prosecute you for it. 

Bryan:

I'm a Chicagoland Attorney and RE Broker.  I negotiate all of my own short-sales.  I have been confronted with a Buyer's Attorney who made similar statements so you're right, the scrutiny is out there.  There is no "bright-line test" in Illinois for what is the practice of law.  Case-by-case and if you're doing clerical acts in equator only you'll be fine.   Call the ISBA and talk to them and see what they say.    http://www.isba.org/resources/upl 

Closing a short-sale is a "debt settlement" service which contain numerous legal issues that non-lawyers should not engage.  Example:  1)  Not all lenders offer deficiency release so that needs to be negotiated and discussed; 2)  obvious tax ramifications; 3)  contract and addendums requiring frequent amendments; 4)  arm's length affidavits to be explained;  financial contributions or promissory notes to be signed, 5)  the foreclosure process itself benefits and trade-offs; etc. etc.  

Stick to the clerical stuff in equator like you've said and you'll be fine. 

Justin Gaffney 

Good grief..this argument has been going around for years!!  Don't charge any fees other than your standard, disclosed, commission..

Bryan, I too have been doing short sales in Illinois for a very long time, and this was an issue back in the early days.  Several times the IL Bar Assoc. lobbied to the state to make short sales considered the practice of law, and it was repeatedly shot down.  This attorney is apparently not experienced. The way you are doing it is the way I do it, always have a sellers attorney in the deal.  A good one will go to bat for you and advise the buyers attorney of your worth and experience as a negotiator.  As far as certain parts of the short sale being the practice of law, such as structuring promissory notes, explaining the approval letter language, or questions of deficiency, I turn that over to my attorney partners who then advise the client.  My role as a negotiator is to structure the deal and get the approval.

Joe Alfe

Short Sale Processors Inc.

www.ssprocessors.com

RSS

Members

© 2024   Created by Brett Goldsmith.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************