Real Estate Law Creates New Private Right of Action

by Christopher Simmons on November 10, 2011

Ben Kuhn Raleigh Commercial Real Estate Attorney

New Private Right of Action for Damages PLUS Attorneys’ Fees for Unauthorized Practice of Law

Recently, Raleigh Real Estate Attorney Ben Kuhn gave a presentation about a new North Carolina law affecting real estate transactions. Ben spoke about North Carolina Session Law 2011-336 (Senate Bill 349), which has been passed by the General Assembly and signed by the Governor.  It creates a new private right of action for people harmed by the unauthorized practice of law and entitles them to recover both damages and reasonable attorneys’ fees.

To accomplish this, the Session Law enacts a new General Statute, N.C. Gen. Stat. §84-10.1. The new statute is an addition to Article 1 of Chapter 84, which governs the unauthorized practice of law.  Previously, Chapter 84, Article 1 had only permitted a District Attorney to file a civil lawsuit to seek an injunction prohibiting someone (or some corporation) from the unauthorized practice of law. (It also required, and still requires, a DA to indict such a person for the Class 1 Misdemeanor of unauthorized practice of law.) But when N.C. Gen. Stat. §84-10.1 goes into effect on January 1, 2012, private individuals will also be able to file a separate civil lawsuit against others they claim have engaged in the unauthorized practice of law. Moreover, unlike the District Attorney, private individuals will be able to recover their money damages as well as reasonable attorneys’ fees.

Text of the New Statute, N.C. Gen. Stat. §84-10.1

Here is the text of the new statute, which becomes effective January 1, 2012:

N.C. Gen. Stat. §84-10.1. Private cause of action for the unauthorized practice of law.

“If any person knowingly violates any of the provisions of G.S. 84-4 through G.S. 84-6 or G.S. 84-9, fraudulently holds himself or herself out as a North Carolina certified paralegal by use of the designations set forth in G.S. 84-37(a), or knowingly aids and abets another person to commit the unauthorized practice of law, in addition to any other liability imposed pursuant to this Chapter or any other applicable law, any person who is damaged by the unlawful acts set out in this section shall be entitled to maintain a private cause of action to recover damages and reasonable attorneys’ fees.”

New Statute Also Expands North Carolina Law on Recovering Attorneys’ Fees

N.C. Gen. Stat. §84-10.1 adds to the short list of North Carolina statutes authorizing the award of attorneys’ fees. That is significant because in North Carolina you cannot recover attorneys’ fees unless a specific statute authorizes a judge to award them to you, and there are very few such statutes. This is the rule on attorneys’ fees in NC even for most business contracts, even when the parties to the contract have agreed to an attorneys’ fees provision.  To read about a new exception to this rule, you should see this post: New Statute Makes Attorneys’ Fees Provisions in Business Contracts Enforceable.

Raleigh Real Estate Lawyer Ben Kuhn

Ben Kuhn is Raleigh real estate attorney who practices commercial real estate, including

  • Retail, Office, Industrial and Commercial Leasing
  • Land and Development Acquisition and Financing
  • Zoning and Land Use Compliance
  • Development Entitlements and Permitting
Ben is also a founding member of the Real Estate Lawyers Association of North Carolina, a group focused on consumer protection in residential real estate transactions.  The association’s June 2011 update contains a detailed review of the of the new law.  To read that and other updates by the association, you should click here.