Writing Documents is determined to be practicing law in FL

A year or so ago, a member of this forum (who was also a property manager) accused many on this forum of practicing law without a license because we were offering interpretations of State Statutes.

This caused an interesting discussion. Perhaps the following will also provide an interesting discussion:

It appears that if a PM or MC assists the Board in rewriting or creating governing documents, that this is considered practicing law without a license in FL.

Here is a link to the FL Supreme Court opinion (dated 5/14/2015):
THE FLORIDA BAR RE: ADVISORY OPINION — ACTIVITIES OF COMMUNITY ASSOCIATION MANAGERS.

Here is an article from an attorney blog about that opinion:
Amending an Association’s Governing Documents is the Practice of Law…at least in Florida

Sorry Bob.

I was unable to locate it when I looked for it.
I'll keep looking and if I find it, I'll post it.

Agree with your reading that the opinion only applies to PMs and MCs.

Not sure if you are correct re Directors. Many organizing docs and/or insurance policies that I have seen include a clause that Directors have D&O coverage if they rely on the advice of an expert. Those clauses are typically silent about board decisions that do not involve consultation with an expert - So it's appears to be open ended.

In this opinion, the FL Supreme Court says that MCs can perform "ministerial" acts (follow clear-cut rules), but would have to be lawyers if they are going to give opinions on essential rights (maybe like Geno's issue of deciding what limits can be put on flying a flag).

So my next question would be - Would Directors be personally liable (lose D&O coverage) if they rely on Geno or on the MC?

Arizona has grappled with similar issues and come to different conclusions. We have no such thing as a CAM here, but there has been an issue raised about who may prepare various kinds of legal documents. The State Bar licenses document preparers but there are many unlicensed people who routinely prepare documents. The Bar held that a license is not required to prepare documents if it is incidental to the primary service provided, that there is no separate charge for preparing the documents, and document preparation alone is not offered.

One of the good things from this Florida advisory opinion is that it will force boards to seek advice from real attorneys instead of going to CAM's, whose competence to give legal advice is questionable at best. Obtaining legal advice is a necessary and normal part of operating an association yet most boards will do anything to avoid doing so; the fact that an attorney charges for his time and advice causes to many boards to avoid obtaining legal advice altogether or obtaining it from unqualified sources.

I can see this coming about from some property managers being overzealous and over-promising. In my neigh orhood everytime the hoa got a new PM they wold tell the board they could collect and enforce, even after being notified of various situations. One PM tried to enforce documents on my property. They were informed that we had no restrictions and to leave us alone. They basically said they knew the HOA's attorney were involved with us and they continued to try to enforce because they believed the set of restrictions were still in place and they could proceed. One could view their actios ( advising the board about collections,enforcement, etc." As practicing law.

I do think that that is a creative argument though.

Great question.


The problem I fear is that most MCs tune into the expectations of the Boards they serve. The relationship may be at stake if they don't step up or step down at the right moment.

I can see that. My HOA went shopping for an attorney 15 years ago to do a mandatory conversion. Knowing they couldn't convert without 100% they looked until they found an attorney who said he could do what they want, that it is a "gray area" of the law and his method was safe just so long as nobody challenges it.

Fast forward to the last few years. I challenged it and they have burned through attorneys and association managers because the board wanted collections and enforcement regardless of the law and the lawyers and managers complied or even promised results.

Now the board is on their 4th property manager in 2 years and third lawfirm in 7.
Their stated reason for the change - they weren't doing what they wanted, which was collecting fees and assessments and pursuing legal action against some homeowners. The number of defiant property owners has grown since news has spread that the restrictions expired which has pushed the board to pressure their management and lawyers.

With others, it's true that virtually all occupations try to "professionalize" be requiring more & more credentials, more months or years of schooling.

Occupations & professions also try to protect their status, respect, pay, by trying to keep related occupations away from their areas of expertise Or by attempting to encroach on others' areas.

I recall years ago in CA, the legal profession tried mightily to pass legislation that would give them a monopoly on writing contracts. Big fight between realtor lobbies and lawyer lobbies. Relators were able to keep that area of expertise. But the same happens in most occs & professions.

Our HOA's contract with our MC states that the PM is not responsible for knowing CA HOA laws, but the Board always has counted on the PM for exactly that. We definitely will hire our HOA GC to rewrite our CC&Rs, but our PM will offer sound advice based on her 10 years in the business at, now, 3 high rise HOAs, and so will a couple of us directors.

No certification is required in CA to manage HOAs, but applicants for PM positions must reveal their status. It's interesting that given their huge responsibilites -- in many cases-- this is one occupation that has so few requirements, yet opportunities for very large a salaries. Two of our former Asst. Mgrs. had no college experience and were under 25 when they, after 3-4 years work experience apiece, were promoted by our MC to their "own" buildings--smaller midrise HOAs in our urban setting.

So far as I know, they're both doing well. Meantime, we've had a couple of security officers who've moved on to Asst. Mgr. slots in other HOAs. So threes' actually a very nice career ladder in property mgt. of this kind in CA.

Geno

Those links are to "scare you advertisements" by law firms. I would expect no less form them.

NpS wrote:
"IMO, the reason that CA, TX, and FL are the most regulated HOA states is that they have the most lawsuits. More lawsuits, more regulation. More regulation, more lawsuits."

Could it also be the case that sheer numbers of HOAs mean the likelihood of lawsuits is greater? from 2012:

# of HOAs % of All

FL 46,000 14.2%
CA 42,5 13.1
TX 18,4 5.7

SC & PA 6,400 2%

So maybe causality often looks like this?

# of HOAs ---> more likelihood of abuses -----> more regulations to protect homeowners?

Btw, the average number of dwellings in CA HOAs is 103.

See: davis-stirling.com, CIDs (Sorry i lost the complete citation it was from a Zogby survey)

Heres' the complete reference to my citation above.

http://www.davis-stirling.com/Portals/1/docs/CAI%20Foundation%202012%20Statistical%20Brief.pdf

Ironically, there are actual forms available for some HOA business. They are available at some of the Big Office stores. They are in the same areas as "Lease agreements". Basically, you can draft your own rental agreements and other minor agreements. They come with 2 options. 1 just with the paperwork. The other with a CD rom and paperwork. It is under 20 dollars for either.

The CD and the documents have the options for EACH state separately. That way if you are in Alabama, it will guide you on how to do the paperwork for that state. Basically, giving you a general guide/paperwork you customize.

I have seen some of these for Articles of Incorporation. There may be others in the HOA realm available upon further research. However, keep in mind this is NOT practicing law without a lawyer. It's more like doing your taxes without an accountant. The lawyer part if required, would be in the actual FILING at the COURT level.

There are reasons I never post references to laws in my posts like others. It's because I do NOT represent myself as a lawyer nor as one who can fully interop the law. Quoting legal statements may lend people to believe something that I am not qualified to present. So I don't do it but give my "layman's" terms as best to my knowledge.

1. Selling or providing standard forms is not the practice of law. Filling out the forms may be.

2. Filling out the forms yourself is not the practice of law.

3. As I read the FL opinion, an MC who filled out and filed Articles of Incorporation (not sure why they would) would not be practicing law. The opinion makes a distinction between things that are "ministerial" in nature (like Articles of Incorporation) and things that involve decisions about legal rights (like CC&Rs).

The 1996 FL SC opinion addressed the following activities:
A. drafting of a claim of lien and satisfaction of claim of lien;
B. preparing a notice of commencement;
C. determining the timing, method, and form of giving notices of meetings;
D. determining the votes necessary for certain actions by community associations;
E. addressing questions asking for the application of a statute or rule; and
F. advising community associations whether a course of action is authorized by statute or rule.
The 2012 FL SC opinion reaffirmed the 1996 opinion and also addressed the following activities:
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 declaration of covenants, bylaws, and articles of incorporation when such documents are to be voted upon by the members;
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 718.1255, Fla. Stat.;
11. Preparation of construction lien documents (e.g. notice of commencement, and lien waivers, etc.);
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 letters; and
14. Any activity that requires statutory or case law analysis to reach a legal conclusion.

And yes you may still need a lawyer to sort things out.

The court's authority to issue an advisory opinion may be different when the opinion pertains to regulation of the legal profession.

FL has a committee that oversees and monitors complaints about the unlicensed practice of law. These questions were put to the committee and the committee requested an opinion from the FL Supreme Court. In it's answer to question 6, the Court referenced § 718.112(f) several times. It didn't refer to 720 at all. So I don't think that there was any confusion about HOAs (720) vs Condos (718).

I'm not surprised that the state didn't offer useful information when you called. Non-lawyer employees of the state are trained not to say anything that could be considered a legal opinion.

The FL Supreme Court is a state court, not a federal court. So a federal restriction on federal courts doesn't apply. Each state court system has its own set of rules.

The FL Supreme Court has ultimate authority over all members of the FL bar. The FL Supreme Court also has the authority to set and change rules of civil and criminal procedure throughout your state. It's totally appropriate for them to give an advisory opinion on what constitutes the practice of law in FL.

The FL Supreme Court has a vested interest in controlling the flow of court cases through the courts. And to that end, I think they have drawn some lines - some clear, others fuzzy. The fuzzy ones may not be settled until an actual case is decided. But that's the way it goes.

That's not to say that a State Supreme court can't be corrupt. My state went through a major upheaval a few years back. But I don't see that kind of stuff going on here.

This link may be of interest http://www.myfloridalicense.com/dbpr/pro/cam/. Apparently Unlicensed Practice of Law is "investigated, and if necessary, prosecuted, by the Florida Bar, and carries potential criminal penalties". I'm not sure how likely that is when it comes to advice/opinions given on a forum for no payment.

Apologies if it this link has already been posted - I didn't read the full thread.

I personally think it is best to make it clear in any opinion given that it does not constitute advice and that a lawyer should always be consulted before acting.

I think it is best if Directors always take advice.

People always quote the Business Judgement Rule as protection for business decisions taken by HOA Directors but after researching that I found a thread on LinkedIn where lawyers discussed this among themselves and there was certainly opinion that experts needed to be consulted to benefit from this protection. Not just lawyers but experts in general, with written advice obtained.

Then there's the issue of Directors & Officers Liability Insurance which I did see mentioned above.