CAMs and Unlicensed Practice of Law
SUPREME COURT ANNOUNCES A FINE LINE BETWEEN COMMUNITY MANAGER AND ASSOCIATION ATTORNEY
In a perfect world, community association managers would be tasked with maintaining the affairs of the communities they oversee with-out the possibility of violating any established laws or statutes. In reality, however, managers often find themselves plodding through the gray area somewhere between licensed CAM and association attorney. The Florida Supreme Court, in a decision released in May 2015, has provided some guidance to help CAMs navigate through these precarious situations. This article provides a summary of the Court’s decision.
In its opinion, the Court continues to make an important distinction between activities that are purely ministerial in nature—that is, activities that do not involve the exercise of judgment or discretion—and those that require application or interpretation of law to a specific set of facts. Activities which are merely ministerial do not constitute the unauthorized practice of law. Conversely, activities which require the interpretation of statutes, administrative rules, community association governing documents, or rules of civil procedure do constitute the practice of law and are prohibited.
Specifically, the Court found the following activities were purely ministerial in nature, and thus, do not constitute the unauthorized prac-tice of law:
- Completing Secretary of State form CR2E045 (chang-ing registered agent) and Secretary of State Annual Corporation Report; and
- Drafting certificates of assessments, notices of date of election, ballots, written notices of meetings, meeting agendas, and affidavits of mailing;
- Preparation of a Certificate of assessments due, at the time an account is turned over for collection, once a foreclosure has been commenced, and when a member disputes in writing the amount owed; and • Drafting of pre-arbitration demand letters required by 718.1255, Fla. Stat.
Conversely, the Court specifically found the following activities do constitute the unauthorized practice of law:
- Completing BPR Form 33-032 (frequently asked questions and answers sheet);
- Drafting a Claim of Lien, Satisfaction of Claim of Lien, and Notice of Commencement form;
- Determining the timing, method, and form of giving notice of meetings;
- Determining the votes necessary for certain actions, which would entail interpretation of certain statutes and rules;
- Answering a community association’s question about the application of law to a matter being considered;
- Drafting amendments and certificates of amendment that are recorded in the official records when such documents are to be voted upon by the members;
- Determination of number of days to be provided for statutory notice; • Determination of affirmative votes needed to pass a proposition or amendment to be recorded;
- Determination of owners’ votes needed to establish a quorum; • Preparation of construction lien documents (e.g., notice of commencement, and lien waivers, etc.); • Preparation, review, drafting, and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, etc.; and
- Any activity that requires statutory or case law analysis to reach a legal conclusion.
However, as everyone knows, nothing in the law is black and white. The Court found that the following activities may or may not constitute the unauthorized practice of law, depending on the specific, factual circumstances:
- Modification of Form BPR 33-033 (drafting a limited proxy);
- Drafting a limited proxy form, and drafting documents required to exercise the community association’s right of approval or right of first refusal on the sale or lease of a parcel;
- Identifying, through review of title instruments, the owners to receive pre-lien letters; and
- The preparation of documents concerning the right of the association to approve new prospective owners. With respect to the gray area issues above, the following activities were found to be ministerial in nature, and thus, are not considered the unlicensed practice of law:
- Modifying a form to include the name of the community association;
- Phrasing a yes or no voting question concerning waiving reserves; waiving the compiled, reviewed, or audited financial statement requirement; the carryover of excess membership expenses; the adoption of amendments to the Articles of Incorporation, Bylaws, or condominium documents; and
- Filling in the name and address of an owner on a limited proxy form.
However, complicated modifications to Form BPR 33-033 and drafting of an actual limited proxy form or questions in addition to those on the preprinted form require that a CAM consult with a licensed attorney. Similarly, the Court found that although CAMs may be able to draft the documents required to exercise a community association’s right of approval or first refusal to a sale or lease, they cannot advise the association as to the legal consequences of taking a certain course of action. With respect to review of title instruments, the Court felt that searching the public records to identify past and present owners of property—simply for the purpose of making a list of all record owners was ministerial in nature and was not the unlicensed practice of law.
However, if a CAM uses this list to make the legal determination of who should receive a pre-lien letter, this would constitute the unlicensed practice of law. The Court determined that if the preparation of a document requires the exercise of discretion or the interpretation of statutes or legal documents, a CAM may not prepare the document. While CAMs may be licensed through the DBPR and are subject to Florida Administrative Code’s Standards of Professional Conduct, CAMs must also be cognizant of the Rules Regulating the Florida Bar. CAMs found to be in violation of the Rules by engaging in the unauthorized practice of law may face a monetary penalty or, in extreme cases, may be found in indirect criminal contempt and face imprison-ment for up to five months. At the end of the day, if a CAM is unsure whether the considered activity is, or is not, the practice of law, consult with a licensed Florida attorney who can help you avoid a potentially costly situation.
SCOTT GROSS, PARTNER, ANGIUS & TERRY LLP
CONSTRUCTION DEFECT ATTORNEYS
Scott Gross is a partner in the Florida office of Angius & Terry LLP. He focuses his practice on representing home-owners and homeowner associations in construction defect litigation. Mr. Gross graduated from the University of Florida with a Bachelor of Arts Degree in Political Science and received his Juris Doctorate from the Shepard Broad Law Center at Nova Southeastern University. For more information, call (727) 474-0200 or visit angius-terry.com.