by Michael Ungerbuehler / Published May 2015
The services provided by licensed community association managers, or CAMs, are critical to the success of community associations in Florida. Depending on the management agreement between an association and its CAM, the CAM may be involved in overseeing all aspects of an association’s operations. This, of course, leads to the proverbial ‘million-dollar’ question of what work a CAM does that might fall under the practice of law.
As has been extensively discussed and commented upon, the Florida Legislature amended Section 468.431(2), Florida Statutes, to revamp the definition of “community association management” and the services provided by CAMs that would not be considered the practice of law. The intent of this article is not to be the latest to weigh in, but, instead, to draw attention to certain work CAMs may perform that tends to border on—or actually turn into—the practice of law.
Given that the collection of delinquent assessments continues to remain such a significant concern for associations, this seems to be a good starting place. The 2014 amendment to Section 468.431(2) included as part of “community association management” the determination and calculation of monies due to an association. At first glance, this would seemingly not involve the practice of law—plugging numbers into pre-prepared forms and completing simple math. One would rightfully expect that such activities would not require a law license. In fact, most attorneys will claim that they became attorneys because they’re “bad at math and prefer words.”
However, when it comes to determining the extent of a new owner’s liability toward a prior owner’s delinquency, such a determination ought to involve a legal analysis in order to ensure that the entire amount of money the association is entitled to collect is being properly pursued. First, the association’s governing documents must be analyzed to determine whether they have control over recent changes in the statutes. Next, the facts by which the new owner acquired title to the property must be analyzed to determine whether the new owner’s liability for the prior owner’s delinquency must be limited in any manner. These analyses are not the mere plugging of numbers into a form and performing simple math. Instead, such analyses require the application of legal precedents and arguments to the facts in order to make a proper determination. Thus, in such instances, those analyses involve the practice of law and go beyond the intent of the amended language of Section 468.431(2).
A related issue involving the collection of assessments is the preparation of statutory pre-suit forms. Chapters 718 and 720, Florida Statutes, were amended to include prescribed forms for intents to lien and intents to foreclose. However, the statutory forms fail to consider any unique provisions of an association’s governing documents that may require a modification to such forms. Equally important, the statutory forms do not take into consideration application or specific requirements of the Federal Fair Debt Collection Practices Act. If any of these statutory forms are not properly prepared, it may jeopardize the association’s position in a subsequent lien foreclosure lawsuit.
Another aspect of the 2014 amendment that initially appears straightforward but could involve the practice of law regards the drafting of pre-arbitration demands. Section 718.1255, Florida Statutes, requires that a petition for arbitration include a copy of the demand sent to the owner that gives written notice “of the specific nature of the dispute,” or the petition must be dismissed. To the extent, then, that a pre-arbitration demand required interpretation of an association’s governing documents and/or an analysis of the relevant facts to determine the “specific nature of the dispute,” such would involve the practice of law. Moreover, if any such demand failed to properly recite the nature of the underlying dispute, the association’s arbitration would be dismissed.
One of the most common areas in which CAMs invariably end up delving into the practice of law involves the negotiation of contracts. Monetary provisions are almost always going to be business decisions of the client, and, thus, within the purview of a CAM’s work. However, despite the 2014 statutory amendment, the negotiation of performance terms necessarily involves the practice of law. The in-verse to performance is failure to perform (or deficient performance), which ought to lead to a breach of contract and remedies as a result.
Ensuring that an association’s interests are properly protected with respect not only to performance, but also to its remedies for a failure to perform requires analysis of the contract’s contemplated transactions and facts relevant to the association and the other party. Moreover, it requires application of legal precedents to ensure that the proper provisions are included while others that may render a contract unenforceable are excluded. Such work goes far beyond the intent of the statutory amendment and indeed involves the practice of law.
But, the negotiation and review of contracts does not end just at performance issues, it involves a review of the entire document in order to safeguard against ambiguities and to properly address all of the anticipated and expected outcomes. In order to avoid ambiguities, the language used must be as precise as possible while still leaving room for flexibility in carrying out the terms.
Michael A. Ungerbuehler
The Association Law Firm
In 2008, Michael A. Ungerbuehler teamed up with Paul E. DeHart III at the Association Law Firm to exclusively focus his practice on providing legal services to commu-
nity associations. Their vision is simple: to offer communities in Florida a better and more affordable community association legal product. Ungerbuehler has significant experience handling association legal matters, has drafted and revised governing documents and other corporate papers, handled collections and covenant enforcement activities, provided general corporate advice to client board members, engaged in mediations and arbitrations, and handled association-related litigation matters through trial and appeal. For more information, visit www.AssociationFirm.com, call (407) 992-8812, or e-mail info@AssociationFirm.com.
Far too many contracts interchangeably use differing words to refer to the same concept or thing (think of how many contracts you have looked at that will refer to the document as the “contract” then the “agreement” then, perhaps, some other term). Each instance of inconsistency in word choice is a potential ambiguity. Each ambiguity is a possible conflict that may result in a lawsuit (thereby incurring attorney’s fees and costs).
Coral Lakes Community Association v. Busey Bank, N.A., No. 2D08-5062 (Fla. 2d DCA, February 19, 2010), is the obvious choice for one of the more recent examples of why the negotiation and drafting of contracts is so critical in protecting an association’s interests. As the Coral Lakes court stated, “The HOA could have protected itself if, in the drafting of its Declaration, it had included language…”
In the January 2015 edition of FLCAJ, an article was written regarding the importance of contractual language. Negotiation of a contract without legal review simply creates potential risk to the association; in most instances, the expense of legal review of a contract will outweigh the consequences of not having done so.
Community associations are best served when all involved in operating the association’s affairs carry out their roles using their expertise. CAMs play such a critical role in the viability of associations, but it’s important to remember that legal counsel also plays a vital role and should be called upon for expertise in addressing legal aspects of the association’s affairs.