You are correct. However I think in practice you can get away with it if you keep bandwidth low. I've been running a OwnCloud/NextCloud server from my residential Comcast account for years with no issues.
I wonder what happens if nextcloud does a full sync to a new device.
As far as what happens with a full sync: it's not really doable outside of the LAN for several reasons. One is I have a data cap from Comcast of 1 TB/month. Another is the upload speed is only 10 Mbps. That's actually one of the reasons I went to self hosting.
Lawyers, really? Why wouldn't they just cancel your account?