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In re Opinion No. 26 of Committee on Unauthorized Practice of Law, 139 N.J. 323, 654 A.2d 1344

Facts

The case arose from a long-standing dispute between realtors and attorneys regarding the unauthorized practice of law in residential real estate transactions in South Jersey, where neither party is typically represented by counsel. The Committee on the Unauthorized Practice of Law had previously ruled that various activities performed by brokers and title officers constituted unauthorized practice. However, the court found that the public interest did not necessitate prohibiting these practices, especially given the lack of evidence showing harm to unrepresented parties over the years.

Opinion No. 26 of the Committee on the Unauthorized Practice of Law, 130 N.J.L.J. 882 (March 16, 1992), was issued in response to an inquiry, one of many, from the New Jersey State Bar Association. The inquiry sought a determination of whether the South Jersey practice constituted the unauthorized practice of law.

Issue

Whether brokers and title company officers engaged in residential real estate transactions without the presence of attorneys are committing the unauthorized practice of law.

The question before us is whether brokers and title company officers, who guide, control and handle all aspects of residential real estate transactions where neither seller nor buyer is represented by counsel, are engaged in the unauthorized practice of law.

Rule

The court determined that the practice of law is not automatically prohibited for non-lawyers if the public interest does not require such prohibition, and that informed parties may choose to proceed without counsel.

We have concluded, however, that the public interest does not require such a prohibition.

Analysis

The court analyzed the public interest in allowing parties to proceed without legal representation, weighing the risks and benefits. It noted that while the absence of counsel poses risks, the historical context of the South Jersey practice showed no significant harm to buyers or sellers. The court concluded that as long as parties are informed of the risks and the interests of brokers and title officers, they should retain the right to choose their level of representation.

We determine the ultimate touchstone—the public interest—through the balancing of the factors involved in the case, namely, the risks and benefits to the public of allowing or disallowing such activities.

Conclusion

The court ruled that the practice of conducting real estate closings without attorneys does not constitute unauthorized practice of law, provided certain conditions are met to ensure parties are informed of the risks involved.

Ordered accordingly.

Who won?

The prevailing party was the New Jersey Association of Realtors, as the court allowed the South Jersey practice to continue under specified conditions, affirming the right of parties to choose to proceed without counsel.

We believe, given this record, that the parties must continue to have the right to decide whether those savings are worth the risks of not having lawyers to advise them in what is almost always the most important transaction they will ever undertake.

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