LLCs and Attorneys Bill to be Filed

External Links:

• Varney Enterprises decision
• LAS Collection Management decision
• Rental Property Management Services decision
• CHAPA Right to Counsel bill

Video Transcript

[Start 0:00:00]
Hi! My name is Doug Quattrochi. I’m the executive director of MassLandlords, and today’s business update is about one of the 11 bills we hope to file this session. We need your help with this. This is, “LLCs and Corporations Should be able to Represent Themselves in Summary Process Cases.” Where does this come from?

Well, for decades now in Massachusetts, we’ve have laws enforced through cases that have said, “If you’re an LLC or corporation, you must hire an attorney before you can do anything in court.” It’s been a case law starting with Varney where we had not a landlord but a company who is trying to file an unpaid invoice claim in small claims court. We have LAS Collection Management where a case was thrown out because the management company didn’t have an attorney. Then we have Rental Property Management Services where a landlord was sanctioned for the unauthorized practice of law. MassLandlords helped stopped triple damages in that case, but the manager was still sanctioned despite the courts even allowing landlords to file sometimes without an attorney. The case law is now crystal clear: you have to have an attorney if you’re an LLC or a corporation.

Although there are a lot of aspects of summary process, eviction, small claims, and other issues in Landlord Tenant Law that you really do want an attorney for, there’s also a lot of stuff like in the case of RPM Services like filling out a summons. There’s a lot of stuff that a manager can really do on their own especially if they’re talking about an LLC with a single owner investor. What’s really the difference from an individual sole proprietor? A sole proprietor doesn’t have to have an attorney in court, but as soon as you make an LLC, suddenly you do, so that doesn’t make a lot of sense from a landlord’s perspective. That’s why we want to change it.

It also has real policy implications because when you require LLCs to have an attorney and therefore you have a lot of landlords with attorneys in court, it creates this kind of perception that landlords have a lot of money are extra powerful because we also tend to hire attorneys. It gets used to advocate for a taxpayer-funded right to counsel. This right was expanded greatly. It’s not universal, but expanded greatly during the pandemic, and it’s kind of the wrong way that we should be approaching the problem.

MassLandlords has studied nearly 100,000 eviction cases over the last three years, filings, and outcomes, and we can see that when a renter is forcibly removed from their home, which is a disaster for both landlord and the renter, it’s primarily for one of two reasons. It’s either because they’ve lost hope of actually winning their case or receiving rental assistant and therefore, they didn’t show up. It’s called a default. Or it’s because they entered a mediated agreement, a payment plant that was unsustainable. Those are really the two main reasons why anybody in Massachusetts ever gets forcibly removed from their housing.

A taxpayer-funded right to counsel, although it sounds like it ought to help renters, it can only delay the inevitable if the main issue is economics and the rent can’t be paid. If you flip back to a landlord’s perspective on this, why do landlords want to be free to represent themselves. This again comes from the court data that we’ve studied. You can see in our cases that two-thirds of all the landlords that have filed cases the last three years have been legally required to have an attorney just because they’re an LLC.

Now when you look at landlords who have been given the choice what percentage are non-LLCs sole proprietors. We choose to hire an attorney; still more than half prefer to go it alone represent themselves because they feel their case is pretty straightforward and they can effectively represent themselves in court.
I mentioned earlier some cases get really complicated, so we’re not saying you shouldn’t hire an attorney, but the point is if you’re an LLC, you should be free to choose same as the sole proprietor. That’s why we’ve created a very simple bill that we will be filing and we hope it will pass.

It basically says the part of the law that requires an LLC to hire an attorney should not apply in summary process proceedings. If you are the president, treasurer, or secretary of your LLC and you want to be able to represent your LLC or you should be free to choose to do that if that’s choice. Of course, you can still choose to hire an attorney as well, and in many cases, that’s still advisable.

This is one of the 11 bills that we hope to file this 193rd session, starting 2023 here, “An Act to Equalize Counsel in Eviction Proceedings.” If you’re interested, you can look at our bills page to see text of all the bills we’re interested in.

If you’re willing, please volunteer. Please become a property rights supporter. If you’re not a member already, please join as a member because it takes an awful lot of effort to write these bills, to make sure we’re doing the right thing and to get the word out.

Thank you to all of our property rights supports and members for enabling this. this a really important initiative that we’re working on, and we’re very thankful for your support.

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