RISK & TEMPTATION: THE UNAUTHORIZED PRACTICE OF LAW

BY DIRECTORS

The unauthorized practice of law (hereinafter referred to as "UPL") continues to be a hot topic largely due to the recognized risk generated from and created by a violation. The UPL by any member of the board of directors creates a potential risk to all community associations (both condominium and homeowners) which the association and the board should strive to avoid. The temptation for a director to engage in UPL is always present. Quite often, UPL occurs in community associations that are self-managed, who have directors who ostensibly have a certain amount of knowledge or experience in community associations, or who may desire to economize by foregoing legal advice. These factors, and undoubtedly there are others, should be "red flags" to Associations and the Board of Directors that UPL is, or may be, about to occur.

The consequences of UPL can be very serious. A director who commits UPL may subject the community association to substantial liability. Furthermore, the perpetrator of UPL could personally be at risk. Engaging in UPL is a criminal offense in the State of Florida. In fact, it is a misdemeanor of the first See UPL, pg 2

REQUIREMENT OR OPTIONAL:

ROBERT'S RULES OF ORDER

Robert's Rules of Order is a widely recognized manual of parliamentary procedure. It was originally written during the 19th century by Henry M. Robert, a career Army officer. The manual has been through several editions, some by General Robert himself and others by his successors. Essentially, the manual is an attempt to take the procedural rules of legislative bodies, such as the Congress of the United States on which the book is principally based, and distill these procedural rules into a manual that is practical.

The manual lists several distinguishing characteristics which describe the type of group for which the Rules of Order should be helpful. The following delineates why Roberts Rules should apply to Associations:

See RULES, pg 3

degree, punishable by up to one year in jail and a fine of up to one thousand dollars for each violation. Keep in mind that directors and officers insurance (commonly referred to as "D&O" insurance) and the indemnification provisions in the community association's governing documents may not protect directors from their own criminal activity. In summary, a director who engages in UPL may be guilty of a crime and may also have violated his or her fiduciary duty to the association. As such, a director who commits UPL may be financially liable to the association for any damages suffered by the association.

The Florida Supreme Court has addressed UPL in the context of community association law. In 1996, the Florida Supreme Court issued its Advisory Opinion in The Florida Bar Re: Advisory Opinion--Activities of Community Association Managers, 681 So. 2d 1119 (Fla. 1996). This Advisory Opinion delineates tasks and actions which definitely constitute UPL, which may constitute UPL, or which may fall into a gray area wherein the surrounding factual circumstances determine whether or not the task or activity is UPL. The Advisory Opinion is ostensibly limited to the activities of a Community Association Manager (hereinafter referred to as "CAM"). Under Florida Law, a CAM must be licensed by the state and must annually earn a specified number of continuing education credits. It is logical to extend the Florida Supreme Court guidelines to directors, who are not required to be licensed nor required to annually earn continuing education credits.

Based on the Florida Supreme Court Advisory Opinion, certain actions appear to be UPL and therefore may present a significant risk to directors. For instance, a particular danger that directors should carefully avoid is giving advice to the community association that in reality involves the legal consequences of taking a 

certain course of action. Another pitfall is drafting

claims of lien or satisfactions of lien. Although claims

of lien and satisfaction of lien appear deceptively

simple and are among the most common documents

drafted for the community association, claims of lien and satisfactions of lien actually require legal analysis of the community association's legal rights arising out of the governing documents and the Florida

Statutes, as well as a determination of the correct legal description and an analysis of record title ownership of the property in question. An improper or unlawful claim of lien or satisfaction of lien may subject the association to a lawsuit for among other possible causes of action, slander of title. In addition to UPL, a director who drafts an improper or unlawful claim of lien or satisfaction of lien may have breached his or her fiduciary duty to the association.

Based upon the Florida Supreme Court Advisory Opinion, directors should also refrain from:

• Preparing amendments to the Declaration, Articles of Incorporation, or Bylaws;



• Drafting the Frequently Asked Questions and Answers Sheet (Department of Business and Professional Regulation Form BPR 33-032);



• Drafting a Notice of Commencement Form (when constructing improvements on community association property);



• Determining the timing, method, and form of giving notices of meeting; and/or



• Determining the votes necessary for the community

see UPL, pg 3

declaration, the declaration controls over the articles of incorporation, the articles of incorporation control over the bylaws, and the bylaws control over rules or any other procedure of the association. Collectively, the declaration, articles of incorporations, bylaws and rules and regulations are generally referred to as the governing documents of an association.

While Robert's Rules of Order is widely recognized as the main authority on parliamentary procedure, it does not automatically have the force and effect of law nor is it necessarily binding unless the documents impose it. Stated differently, there is no Florida Statute that says that condominium or homeowners associations must follow Robert's Rules of Order. However, it is not unusual for an association's board of directors to adopt Robert's Rules of Order as its official rules of procedure through a bylaw. Other organizations may have such a bylaw. For example, the Florida Bar has a bylaw which provides the current edition of Robert's Rules of Order governs the conduct of all meetings of the Florida Bar and its various subdivisions. Therefore, any homeowners or condominium association could probably adopt a similar bylaw. An association could adopt Robert's Rules of Order to govern board meetings, member meetings or both.

Upon first glance, Robert's Rules of Order may seem overwhelming. However, one should remember the manual encompasses technical procedures for a host of unusual situations. In the normal course, the parts of the manual which would be applicable are probably not that many and not that burdensome. Moreover, the manual is organized in such a fashion to place the more basic rules in the front and the more advanced or unusual rules toward the back of the manual.

Robert's Rules of Order is also helpful for association activities other than simply conducting meetings. For

example, the manual includes a discussion of the level of detail which is appropriate to include in meeting

minutes. According to the manual, it is not necessary to record in the minutes every word spoken at a meeting. Rather, the minutes should generally record what was done at the meeting, not necessarily everything that was said. The manual also includes a general discussion of the kinds of issues that should be addressed in articles of incorporations and bylaws. Although this discussion in Robert's Rules of Order would be subordinate to anything in the Florida Statutes or an association's existing governing documents, the manual appears helpful in understanding some of the more general issues that should be addressed in an association's governing documents.

The need to follow Robert's Rules of Order strictly is perhaps directly related to the size and complexity of the association. A small association whose members generally get along probably does not have to pay as strict attention to all of the technical formalities as say a board of a large association or an association which has a number of dissenting factions. Indeed, the more numerous or vocal the dissent within an association, the greater the need to follow procedural formalities carefully. From a risk avoidance standpoint, however, following Robert's Rules of Order should help an association's board demonstrate that it is meeting its fiduciary obligations to the association.

see Rules, pg 5

WE NOW HAVE E-MAIL!

Web Site (from pg 5)

• •Published Articles. From time to time, our firm is asked to write articles for various publications. When this occurs, we will post the published article on our web site.



• •Employment. As our firm is constantly increasing, we are always on the look-out for administrative staff, legal assistants, paralegals, and attorneys. You can now inquire about employment opportunities with our firm at our Maitland office via our web site;



• •Links to other web sites for community associations. You can link up to numerous web sites of interest to community associations through our web site. For example, if you need to find out who owns a property in your association, link up to your county's property appraiser's office web site and find out the owner of record and their address;



• •E-Mail. If you are currently one of our clients, you can correspond with our attorneys and key staff via e-mail! However, if you are not currently a client and are receiving this newsletter on a trial complimentary basis, please direct all your e-mail inquiries to our Director of Client Services. E-mails to any other e-mail address other than our Director of Client Services will not receive a response. For our e-mail addresses, please see the feature box to the right.

If you have a suggestion for our web site, please contact Arlene Ring at any of our offices or via her e-mail address. We encourage your suggestions.