Management Contracts and Employment Agreements

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Management Contracts and Employment Agreements

By Betsy Barbieux, CAM, CFCAM, CMCA / Published December 2019

Photo by iStockphoto.com/fizkes

There are three forms of community association management:

  • Volunteer or self-managed—the community association is managed by the board of directors itself or committees under the direct supervision of the board. No one is remunerated for their services.
  • Association-employee manager—the manager is directly employed by the community association.
  • Management company—the community association engages a management company to provide specific management services. The manager is an employee of the management company. Staff may or may not be employees of the management company and may be directly employed by the community association.

     Your community association should have a management contract or employment agreement prepared or reviewed by its attorney. Provisions should be added or deleted based on your particular needs and goals. The following are key provisions that should be in every contract.

If a community hires a management company, there should be an agreement or contract to formalize the relationship.

     Management contract provisions:

  • Contracting parties
  • Chain of command
  • Responsibilities of management
    • Property maintenance
    • Administrative services
    • Fiscal services
    • General support
  • Insurance
  • Terms of agreement
  • Termination
  • Indemnification and hold harmless
  • Compensation and fee schedule
  • Licenses and permits
  • Notices
  • Termination
  • Modifications
  • Severability
  • Entire agreement

     An employment agreement is used for an association-employed manager.

     Employment agreement provisions:

  • Terms of employment
  • Duties and services to be performed
  • Compensation
  • Termination
  • Association’s obligations
  • Exclusiveness of agreement
  • Modifications
  • Applicable legal sources
  • Nondisclosure of confidential information (this is a statement to the effect that the employee will not disclose confidential or proprietary information belonging to the association and vice versa)
  • Notice provisions
  • Entire agreement

     The agreement or contract should contain all the basic components of a legal contract, and it should do the following:

  • Specify the manager’s authority and duties
  • Establish a clear chain of command
  • Provide for the manager’s compensation and termination
  • Be signed by authorized representatives of both parties (board of directors’ president and the manager or authorized representative of the management company)

     Be sure your manager or management company is currently licensed with the state of Florida, Department of Business and Professional Regulation, Division of Professions. You can check their status at www.myfloridalicense.com.

     Part VIII of Chapter 468 is the statute that requires licensing of individuals and management companies.

Section 468.432, Florida Statutes, states:
     (1) A person shall not manage or hold herself or himself out to the public as being able to manage a community association in this state unless she or he is licensed by the department in accordance with the provisions of this part. However, nothing in this part prohibits any person licensed in this state under any other law or court rule from engaging in the profession for which she or he is licensed.

Section 468.431(2), Florida Statutes, states:

     “Community association management” means any [one] of the following practices requiring substantial specialized knowledge, judgment, and managerial skill when done for remuneration and when the association or associations [cumulative] served contain more than 10 units or have an annual budget or budgets [cumulative] in excess of $100,000:

  • controlling or disbursing funds of a community association,
  • preparing budgets or other financial documents for a community association,
  • assisting in the noticing or conduct of community association meetings,
  • determining the number of days required for statutory notices,
  • determining amounts due to the association,
  • collecting amounts due to the association before the filing of a civil action,
  • calculating the votes required for a quorum or to approve a proposition or amendment,
  • completing forms related to the management of a community association that have been created by statute or by a state agency,
  • drafting meeting notices and agendas,
  • calculating and preparing certificates of assessment and estoppel certificates,
  • responding to requests for certificates of assessment and estoppel certificates,
  • negotiating monetary or performance terms of a contract subject to approval by an association,
  • drafting pre-arbitration demands,
  • coordinating or performing maintenance for real or personal property and other related routine services involved in the operation of a community association, and
  • complying with the association’s governing documents and the requirements of law as necessary to perform such practices.

     A person who performs clerical or ministerial functions under the direct supervision and control of a licensed manager or who is charged only with performing the maintenance of a community association and who does not assist in any of the management services described in this subsection is not required to be licensed under this part.

     “Community association management firm” means a corporation, limited liability company, partnership, trust, association, sole proprietorship, or other similar organization engaging in the business of community association management for the purpose of providing any of the services described above.

     “Community association manager” means a natural person who is licensed pursuant to this part to perform community association management services.

     Section 468.432(2), Florida Statutes, states:

     “A community association management firm or other similar organization responsible for the management of more than 10 units or a budget of $100,000 or greater shall not engage or hold itself out to the public as being able to engage in the business of community association management in this state unless it is licensed by the department as a community association management firm in accordance with the provisions of Chapter 468.”

     Self-management is hard and requires a lot of volunteer time from board members and committees. It seems in most communities the time commitment from the president is huge!

     Professional management can help with the following:

  • Relieve board members and committees from daily oversight of the financial operations, corporate and statutory requirements, and daily maintenance
  • Provide information, training, and leadership on community association operations to the board, committees, and the community at large
  • Foster a sense of community awareness and spirit within the residents
  • Develop a body of leadership through the committee structure
  • Provide the necessary administrative tools to the board to enable it to make wise, informed decisions on both short-term and long-term actions and goals

     All parties involved in the management contract or employment agreement should be sure there is a meeting of the minds with regard to each party’s expectations and responsibilities. When in doubt, check with your attorney.

Betsy Barbieux, CAM, CFCAM, CMCA

Florida CAM Schools

Betsy Barbieux, CAM, CFCAM, CMCA, guides managers, board members, and service providers in handling daily operations of their communities while at the same time dealing with different communication styles, difficult personalities, and conflict. Effective communication and efficient management are her goals. Since 1999, Betsy has educated thousands of managers, directors, and service providers. She is your trainer for life! Betsy is the author of Boardmanship, a columnist in the Florida Community Association Journal, and a former member of the Regulatory Council for Community Association Managers. For more information, contact Betsy@FloridaCAMSchools.com, (352) 326-8365, or www.FloridaCAMSchools.com.