Realtors and Community Association Managers provide valuable real estate services to sellers and buyers of real estate, as well as managing homeowners and condominium associations respectively. However, in providing their respective services, they frequently have issues that have substantial legal ramifications in connection therewith and, in providing advice and opinions on same, run the risk of being accused of the unlicensed practice of law. Knowing what is permitted and what requires specific use of a licensed attorney is important for both Realtors and Community Association Managers.
For Realtors there is a substantial dichotomy between drafting contracts and drafting leases. The Florida Supreme Court held in 1950 in the case of Keyes Co. v. Dade County Bar Association that the drafting of the real estate contract by a licensed realtor who was a party to the transaction did not constitute the unlicensed practice of law. In 1992 the Supreme Court was asked if the drafting of a lease constituted the unlicensed practice of law and while the Supreme Court declined to specifically state so, they did adopt a formal lease which appears to restrict drafting of leases by Realtors without legal counsel except by utilizing the Florida Supreme Court approved forms.
Notwithstanding the right to draft contracts, Realtors can cross the line when they modify preapproved forms adopted by the Florida Realtors Association or the Florida Bar. In addition, the drafting of a substantive addendum to said form contracts can also lead to a claim of unlicensed practice of law. Realtors should err on the side of caution and avoid making any material, substantive changes to the form contract or an addendum unless aided by a licensed attorney. Further, other than filling in the blanks on the Florida Supreme Court approved lease forms Realtors should not make any changes to the approved lease or utilize any other form lease unless done by a licensed attorney.
In 1996, the Florida Supreme Court issued an opinion regarding the activities of Community Association Managers. That opinion specifically set forth a number of areas in which the activities of a Community Association Manager would constitute the unlicensed practice of law. These activities included drafting of a Claim of Lien, preparing a Notice of Commencement, determining the timing, method and form for giving notices of meetings, determining the amount of votes necessary to approve any changes to the governing documents, and advising on the application of any statute or rule.
That opinion resulted in some confusion, and the Florida Bar Real Property, Probate and Trust Section (FRPTL) petitioned the Supreme Court to clarify that opinion regarding the areas or activities which, if completed solely by a Community Association Manager, would constitute the unlicensed practice of law. The Florida Supreme Court confirmed the 1996 opinion and further adopted the FRPTL proposed Advisory Opinion in its entirety.
This opinion expanded the 1996 ruling and clarified by listing fourteen activities, which, if conducted by a Community Association Manager, would constitute the unlicensed practice of law. These include:
1. The preparation of a certificate of assessment due once the matter is in collection with the Association’s attorney, after a foreclosure action has been filed or if a member of the Association has sent written notice disputing the assessed amount.
2. Drafting amendments to the constituent documents of an association.
3. Determining the number of days required for any statutory notice.
4. Modifying the state approve limited proxy form.
5. Preparing any documents in connection with the approval of new members to any Association.
6. Determining the number of votes necessary to pass an amendment to the constituent documents or the number of people necessary to establish a quorum.
7. Preparing pre-arbitration demand letters, construction lien documents, construction or management contracts.
8. Reviewing contracts on behalf of the Association.
9. Determining through an examination of title parties to receive notice from the Association.
10. Any activity that requires statutory or case law analysis to reach a legal conclusion.
While these new rules do not greatly expand the limitations on the activities of Community Association Managers, they do clarify what limitations exist. However, in many cases, due to the original vagueness of the Florida Supreme Court opinion, it was not clear what activities would constitute the unlicensed practice of law. With the new opinion, community Association Managers have a clearer understanding of what they can and cannot do with regard to the enumerated items. Based on this new decision, it is clear that Community Association Managers will need to consult with an association’s attorney on a much more frequent basis in order to avoid a violation of this latest decision.
Even merely ministerial functions can be deemed to have crossed the line of what is illegal activity. Rather than make that determination for themselves Community Association Managers will be forced to seek legal counsel regarding such activities, potentially resulting in additional fees and costs for associations.
Michael J Posner, Esq., is a partner in Ward Damon a mid-sized real estate and business oriented law firm serving all of South Florida, with offices in Palm Beach County. They specialize in real estate and can assist Realtors and Community Association Managers in all legal matters. They can be reached at 561.594.1452, or at firstname.lastname@example.org
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