Consider this: A quasi-governmental utility company, let’s call it “Florida Electric” (a fictitious company) seeks to enter the sprawling common areas of several sub-associations to do some below ground work necessary to provide better service. While each sub-association is managed by the same management company, each sub-association is represented by a different law firm. The first time Florida Electric requests a sub-association sign their “Easement Agreement” the manager sends it to that sub-association’s lawyer who substantially edits the document to provide better protection for their association client.
Florida Electric makes the same request of the other sub-associations. Rather than involve each of the remaining sub-associations’ lawyers, the manager privately shares the previously negotiated Easement Agreement with the other sub-associations to avoid legal expenses for the other sub-associations. While this is a made-up story, similar events do happen in the real world, and likely with more frequency then we are aware. Let’s take a look at just a few issues that can arise from such events.
For starters, the manager has done the other sub-associations an extreme disservice by practicing law without a license. Each community is set up to function differently by their developers, and that includes different easement rights and differing degrees of authority granted to each board. What may have been permissible by one sub-association board could be prohibited without an owner vote in another. Moreover, the limits for Florida Electric’s liability may need to be set at differing amounts pending insurance coverage concerns that also often differ greatly amongst similarly situated sub-associations. Likely, the manager could face civil and criminal theft of service charges. A complaint to the Florida Division of Professional Regulation is a very real possibility, too. Moreover, the manager has exposed the board members to liability, too, as they are complicit factors in the managers bad acts and have completely abrogated their duty to exercise their reasonable business judgment in such an illicit scheme.
The Supreme Court of Florida has given The Florida Bar the duty to investigate and take action against the unlicensed practice of law through “The Standing Committee on Unlicensed Practice of Law”. It is currently considering a request for formal advisory opinion on whether certain activities, when performed by community association managers, constitute the unlicensed practice of law.
In a recent written request from the Chairman of the Florida Bar’s Real Estate Section, confirmation is sought that the activities previously found to be the unlicensed practice of law in the Florida Supreme Court’s 1996 opinion continue to be the unlicensed practice of law. Those activities include the drafting of a claim of lien and satisfaction of claim of lien; preparing a notice of commencement; determining the timing, method, and form of giving notices of meetings; determining the votes necessary for certain actions by community associations; addressing questions asking for the application of a statute or rule; and advising community associations whether a course of action is authorized by statute or rule. The Chairman also asked the Standing Committee to confirm if the unlicensed practice of law for a community association manager includes:
1) Preparation of a Certificate of Assessments due once the delinquent account is turned over to the association’s lawyer;
2) Preparation of a Certificate of Assessments due once a foreclosure against the unit has commenced;
3) Preparation of Certificate of Assessments due once a member disputes, in writing, to the association the amount alleged as owed;
4) Drafting of amendments (and certificates of amendment that are recorded in the official records) to the governing documents;
5) Determination of number of days to be provided for statutory notice;
6) Modification of limited proxy forms promulgated by the State;
7) Preparation of documents concerning the right of the association to approve new prospective owners;
8) Determination of affirmative votes needed to pass a proposition or amendment to recorded documents;
9) Determination of owners’ votes needed to establish a quorum;
10) Drafting of pre-arbitration demand letters required by Section 718.1255, Florida. Statutes;
11) Preparation of construction lien documents;
12) Preparation, review, drafting and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, etc.;
13) Identifying, through review of title instruments, the owners to receive pre-lien letter; and
14) Any activity that requires statutory or case law analysis to reach a legal conclusion.
To read a full copy of the Chairman of the Florida Bar Real Estate Section’s letter seeking the advisory opinion, go to www.Floridabar.org. Then, click the “lawyer regulation” link, and then click “unlicensed practice”, and finally click “formal advisory opinions”.