Associations Should Turn to Managers for Property Management, Not Legal Work

Community associations often turn to their licensed CAM property managers for matters that they truly should be referring to their attorneys. The Florida Bar has recently revisited the issue of the unlicensed practice of law by property managers, and it expects to submit a proposed final advisory opinion to the Florida Supreme Court in the coming months.

In 1996, the Supreme Court of Florida reviewed an advisory opinion issued by The Florida Bar on cases involving the activities of community association managers that constituted the unlicensed practice of law. The court’s review of the advisory opinion held that property managers can take on ministerial actions that do not require legal expertise and interpretation, including the completion of forms for the state’s office of corporations and annual reports; preparation of first and second notices for elections and ballots; written notices of annual meetings; board meeting and annual meeting agendas, and affidavits of mailings.

However, the advisory opinion adopted by the court also found that managers would be engaging in unauthorized legal practice if they should prepare claims of lien and satisfactions of claims of lien documents, as these documents require legal descriptions of the property and establish the lien rights of community associations. The opinion also held that the drafting of a Notice of Commencement form also constitutes the practice of law, as does determining the timing, method and form of giving notices of meetings, and determining the votes necessary to take certain actions – because such determinations necessitate an interpretation of Florida law and the association’s governing documents. In addition, responding to the association’s questions regarding the application of the law to specific matters being considered and advising the association that a specific course of action may or may not be authorized under the law also constitute the practice of law by a CAM.

In the latest meeting of The Florida Bar’s advisory committee, many of the committee’s prior opinions remained consistent, however there were four matters that the committee determined required clarification. Specifically, the committee determined that the term “modification” needs to be defined in terms of what “modifications” a property manager may make to a limited proxy form and whether those modifications are material or ministerial. The committee also requested an opinion as to whether a property manager may prepare documents concerning the rights of the association to approve prospective owners, draft the pre-arbitration demand letters required by Section 718.1255, Fla. Stat., and identify, through review of title instruments, the owners who are required to receive pre-lien letters.

While stricter definitions make the determination of what is the unlicensed practice of law easier to resolve since the line is brighter, associations may argue that they will have to incur more expenses in legal fees because the manager can no longer perform the given task. However, there are a plethora of legal decisions that evidence the complications surrounding the issues created by managers who take on legal responsibilities. In many of these cases, the association whose manager has performed the “legal” task and drafted a demand letter or a claim of lien, the ensuing litigation results in the invalidation of claims of lien and dismissal of arbitrations for non-compliance with the statute — all of which ultimately result in the association incurring more in legal fees to correct the mistake than it would have spent had it originally used the attorney.

Association boards should bear in mind that the preparation of claims of lien, Notices of Commencement and other legal documents do not typically incur significant attorney fees, but the ramifications of problems with these documents and forms can prove to be very costly. It is simply not worth the risk for associations or their managers to prepare these documents in order to avoid the relatively nominal legal fees, and thereby also risk exposing the managers to potential fines and license issues.