Unhappy Property (Manager) Loses in South Carolina

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“If you think hiring a professional is expensive, try hiring an amateur.” – Anonymous

In South Carolina, as in most states, there exist various consumer protection and licensing laws, intended to protect the public from the unauthorized practice of law (or “UPL”, as it is often referred).  Of course, only lawyers licensed in the state in question can practice law in that state, but the question sometimes arises as to what actually constitutes “practicing law”. Community Management Group, which manages HOAs in the coastal, lowcountry part of South Carolina in and around Charleston County, was the subject of a recent South Carolina Supreme Court case. CMG was found to be in violation of the UPL laws in the recent case of Rogers Townsend & Thomas v. Peck, et al.  

CMG represented its HOA clients in magistrate’s court where it prepared the lawsuit and went to court on behalf of its HOA clients to collect outstanding assessments.  When it obtained a judgment, CMG would then file the judgment with the circuit court, thereby making the judgment a circuit court judgment against the debtor.  

Additionally, CMG would prepare and record liens against debtors, and in its own words, intended the lien to “put a cloud on the title”, rendering the property unsaleable until the lien was paid.  

Finally, CMG advertised itself as capable of “hand[ling] collections, lien filing and Small Claims Court actions in house.”  

The South Carolina Supreme Court determined that all of the foregoing acts by CMG were, in fact, the unauthorized practice of law which required representation by an attorney.  Underlying the court’s ruling is longstanding law that defines the practice of law to include the preparation of court documents, the management of proceedings on behalf of clients before courts, and the preparation and recording of legal instruments.

The court was requested to hold that CMG’s practice of interpreting declarations of restrictive covenants, “addressing disputes” (we are not exactly sure what this phrase means) between HOAs and owners, and advising HOAs on remedies to collect unpaid assessments, also constituted the unauthorized practice of law.  The court declined to opine as to whether these acts were UPL because it had no specific evidence in front of it.

The case is not groundbreaking, but it is a stark reminder that the courts in South Carolina, and in most other states, strictly regulate what is, and is not, the practice law within the state and those who exceed the bounds are asking for trouble.  When in doubt, it’s best to leave court filings and, always, court appearances, to licensed attorneys. To read the case, click here.

 

Please give us a call or drop us an email if our HOA law team can assist your HOA or management company with manager loses, or if we can be of assistance in any other way regarding legal issues facing your community. Please be aware that we represent HOAs only – we do not represent homeowners in disputes against their HOAs. We appreciate your reading our HOA law blog and encourage you to share it with others who may be interested. Thank you!

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