Are Community Association Managers Practicing Law?

Formal Advisory Opinion Request Could Change the Activities that May be Legally Performed by Community Association Managers

Restrictions on who can practice law date back to the colonial period in our country’s history.[1] The obvious concerns relate to the quality of legal services that someone who is not trained and licensed as an attorney may provide.  Yet despite centuries of jurisprudence, there is no complete list of what activities constitute the “practice of law.”  That is because the concept of what constitutes the practice of law is flexible and evolves over time.  In fact, the ABA Model Canons of Professional Responsibility state, “It is neither necessary nor desirable to attempt the formulation of a single, specific definition of what constitutes the practice of law.”[2]  Nonetheless, courts in every state have issued decisions setting forth tests to determine what constitutes the practice of law.

In Florida, whether an activity constitutes the unlicensed practice of law, a two part analysis must be made.  First, it must be determined whether the activity is the practice of law.  The second question is whether the practice is authorized.  If an activity is the practice of law but the activity is authorized, the activity is not the unlicensed practice of law and may be engaged in by a nonlawyer.  The Florida Bar v. Moses, 380 So. 2d 412 (Fla. 1980).  In The Florida Bar v. Neiman, 816 So.2d 587, 594 (Fla. 2002), the Florida Supreme Court provided examples of the practice of law which included acts of “holding [oneself] out as an attorney in dealings with others; attempting to argue and advocate the merits of cases, the applicability of the law, evidentiary issues, liability issues, discovery matters, and settlement matters with opposing counsel; and attempting to analyze statutory and case law and to discuss it with clients and opposing counsel.”

Recently the issue of the unlicensed practice of law has come up in relation to activities performed by community association managers.  Community association managers are state-licensed professionals responsible for the administration of the responsibilities of the community as a whole.[3]  Florida Statutes define the term “community association management” to mean management of community associations for compensation when the association or associations served contain more than 10 units or have an annual budget or budgets in excess of $100,000.[4]  Last year, the Real Property, Probate & Trust Law Section of The Florida Bar (“RPPTL Section”), petitioned the Florida Bar’s Standing Committee on the Unlicensed Practice of Law (the “UPL Standing Committee”) for a formal advisory opinion on whether certain activities when performed by community association managers constitute the unlicensed practice of law.[5]  Although the RPPTL Section’s request for opinion addresses community association managers specifically, the UPL Standing Committee’s opinion would apply to the activities of any nonlawyer.[6]

The RPPTL Section requested confirmation from the UPL Standing Committee that the activities found to be the unlicensed practice of law in the 1996 opinion (The Florida Bar re: Advisory Opinion – Activities of Community Association Managers, 681 So. 2d 1119 (Fla. 1996)) continue to be the unlicensed practice of law.[7] The activities addressed in the 1996 opinion included: 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.[8]

Additionally, the RPPTL Section asked the UPL Standing Committee whether it was the unlicensed practice of law for community association managers to engage in any of 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.[9]

On May 15, 2013, the UPL Standing Committee issued its Formal Advisory Opinion[10] specifically addressing each of these activities and found that:

• The preparation of certificates of assessments would not constitute the unlicensed practice of law because the preparation of certificates of assessments were ministerial in nature and did not require legal sophistication or training. (Activities 1-3).
• The 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 by nonlawyers would constitute the unlicensed practice of law. (Activity 4).
• The determination of the number of days to be provided for statutory notice would constitute the unlicensed practice of law if the determination requires the interpretation of statutes, administrative rules, governing documents or rules of civil procedure. (Activity 5).
• The modification of limited proxy forms promulgated by the State would constitute the unlicensed practice of law if the modification requires the interpretation of a statute. (Activity 6).
• Community association managers may be able to prepare documents concerning the right of the association to approve new prospective owners, but they cannot advise the association as to the legal consequences of taking a certain course of action.  Additionally, if the preparation of the documents requires the exercise of discretion or the interpretation of statutes or legal documents, then community association managers cannot prepare the documents without legal counsel. (Activity 7).
• The determination of affirmative votes needed to pass a proposition or amendment to recorded documents; or to the determination of owners’ votes needed to establish a quorum would constitute the unlicensed practice of law for a community association manager to make these determinations if they require the interpretation and application of statutes and the community association’s governing documents. (Activities 8 and 9).
• The drafting of pre-arbitration demand letters required by 718.1255, Fla. Stat. would not constitute the unlicensed practice of law because it does not require the interpretation of the relevant statute. (Activity 10).
• The preparation of construction lien documents (e.g. notice of commencement, and lien waivers, etc.) would constitute the unlicensed practice of law because it requires a legal description of the property and this notice affects legal rights and failure to complete or prepare this form accurately could result in serious legal and financial harm to the property owner, and construction lien law is a very complicated and technical area. (Activity 11).
• The preparation, review, drafting and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, etc., would constitute the unlicensed practice of law because the preparation of said documents establishes and affects the legal rights of the community association. (Activity 12).
• Identifying, through review of title instruments, the owners to receive pre-lien letters did not constitute the unlicensed practice of law if the condominium association manager is only searching the public records to identify who has owned the property over the years.  However, if the condominium association manager uses the list and then makes the legal determination of who needs to receive a pre-lien letter, this would constitute the unlicensed practice of law. (Activity 13).
• Any activity that requires statutory or case law analysis to reach a legal conclusion would constitute the unlicensed practice of law if performed by a condominium association manager. (Activity 14).

The UPL Standing Committee’s Formal Advisory Opinion pinion has been submitted to the Florida Supreme Court for approval and is pending a decision.  If the Court approves the Advisory Opinion in its current form, homeowner associations would be required to hire an attorney to perform all the activities above identified as the practice of law, including preparing certificates of assessments once foreclosure proceedings have begun; drafting amendments to homeowner association bylaws; determining how many homeowner association votes are needed to establish a quorum or pass a motion; and preparing contracts and construction liens.