I. FDCPA and FCCPA Liability:
It is well settled that the federal Fair Debt Collections Practices Act (FDCPA) and the Florida Consumer Credit Practices Act (FCCPA) apply to the collection of maintenance assessments for condominium and homeowner associations. However, these acts do not apply to collection efforts which the creditor, personally, undertakes to collect on a debt nor do they apply to agents whose collection activities are “incidental to a bona fide fiduciary obligation” or which concern a “debt which was not in default at the time it was obtained by such person.”
In the context of collecting delinquent community association assessments, Courts have held that an association management company IS NOT a “debt collector” under the FDCPA. Courts have held that an association’s management company falls under the exceptions found in Section 1692a(6)(F) of the FDCPA. Specifically, the management company has a fiduciary obligation to collect assessments on behalf of the association. Further, the management company was obligated to collect these assessment debts prior to them being delinquent.
Provided that the management company is obligated to collect assessments on behalf of the Association, preferably through a written Management Agreement, the management company should not be held to be a “debt collector” under the FDCPA or the FCCPA.
II. Claim of Lien Preparation and the UPL:
The preparation of a Claim of Lien by a LCAM, without the assistance of a licensed Florida attorney, constitutes the unauthorized practice of law (UPL). Specifically, in 1996, the Florida Supreme Court issued an advisory opinion on this specific issue and stated as follows:
Drafting both a claim of lien and satisfaction of claim of lien requires a legal description of the property; it establishes rights of the community association with respect to the lien, its duration, renewal information, and action to be taken on it. The claim of lien acts as an encumbrance on the property until it is satisfied. Because of the substantial rights which are determined by these documents, the drafting of them must be completed with the assistance of a licensed attorney.
However, where an attorney provides the LCAM with what amounts to a “fill in the blank” form, the LCAM is not engaging in the unlicensed practice of law by filling out and signing the form. Specifically, a licensed attorney must prepare the lien and provide the LCAM with a form that contains all of the legal aspects of the lien, for example:
1. the legal description of the property;
2. any statements as to the application of the associations declaration;
3. any statement as to the applicability of Florida law;
4. compliance with Florida laws (718.116 and 720.3085) concerning the preparation of assessment liens.
“The completion of a legal form which has been prepared by an attorney, where all that is done is filling in the blanks with missing information, does not constitute the practice of law.”
As an association manager, you can breathe a sigh of relief that you are not deemed to be a “debt collector” under federal and Florida law and therefore are not subject to the often burdensome restrictions and requirements on debt collection practices found in these acts. As an association manager you should also be sure to enlist the aid of a licensed Florida attorney to draft the Claim of Lien to secure delinquent assessments. Your only act in relation to the preparation of a Claim of Lien should be to fill in fact-related blanks on the Claim of Lien form. By following this practice, you will insulate yourself from an unlicensed practice of law claim.
This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.