Monday, June 25, 2012

Florida Bar Revisits Issue of Licensed Community Association Managers and UPL

Last week, the Florida Bar's Standing Committee on the Unauthorized Practice of Law met in Orlando to once again discuss the issue of what does and does not constitute the "unauthorized practice of law" insofar as activities being undertaken by licensed community association managers.

In 1996, the Florida Supreme Court held that: (1) ministerial actions taken by CAMs which do not require significant legal expertise and interpretation do not constitute the unauthorized practice of law, such as completing various forms and drafting of notices, but (2) CAMs would violate the bar against the unauthorized practice of law by drafting documents requiring a legal description of property or establishing rights of the community association by making determinations and drafting documents requiring interpretations of statutes and various rules, or by giving advice as to the legal consequences of taking certain courses of action.

The topic of the unauthorized practice of law as it pertains to professional advisors assisting volunteer boards across Florida is certainly worthy of discussion. However, the lengthy list of items being debated by the UPL Committee suggests that there might be a real disconnect between what constitutes "practicing law" and what constitutes "following the law".

Practicing law is generally understood as "appearing before courts," and includes "giving legal advice and counsel to others as to their rights and obligations under the law and the preparation of legal instruments including contracts...etc"

Shouldn't the distinction between following the law as opposed to practicing it be crafted in a common sense fashion? "Determination of affirmative votes" or "Approving new owner documents" can usually be categorized as following the law and the association’s particular governing documents, and is quite different from drafting a document amendment, preparing a lien or a pre-arbitration demand letter.

If there is ambiguity or confusion on whether or not the activity is ministerial or legal, then obtaining advice from a Florida attorney in good standing would be prudent and should be required. In the absence of any such ambiguity or confusion, however, a volunteer board and its manager should be allowed to evaluate the risk/reward in the specific approach/decision that is being considered and proceed in the best interests of the association membership.

It appears to be in the best interests of common interest ownership communities throughout Florida to allow reasonable and capable licensed CAMs and Board members to exercise common sense and judgment in each particular situation when the contemplated activity constitutes “following the law” as opposed to practicing it. Having to run to an attorney to tell you how many owners are needed to pass an amendment when the answer can be found quite simply in many instances can either be categorized as overkill or territorialism on the part of some attorneys pushing for these changes.

It would not be in the best interests of common interest ownership communities to create an arbitrary or petty list of "activities or decisions" that must have a legal opinion. More than half of the state’s approximately 60,000 community associations have fewer than 50 units or lots. The UPL Committee should bear in mind the potential economic impact of its ultimate decision on these small associations should these boards feel they cannot act without the benefit of legal counsel on daily operational matters and thus, refrain from acting altogether to their communities’ detriment.

Friday, June 22, 2012

Ready for Community Association Issues on NPR-WLRN's 'Topical Currents' ?

2012 Legislative Changes impacting Florida condos, HOAs and other community associations will be among the topics I'll be discussing with host Joseph Cooper on South Florida NPR affiliate WLRN's Topical Currents program, this Monday June 25th from 1 pm - 2 pm.

Listen in at 91.3-FM in South Florida's Tri-County area, 91.5-WKWM in the Florida Keys, and live on the Internet at, as I respond to Joe Cooper's questions and your phone calls on topics that in addition to 2012 Legislative Changes that will impact condos and HOAs, should also include:

- Hurricane Disaster Preparedness and Recovery for community associations;
- the Trayvon Martin shooting and association liability;
- new ADA requirements for chair lifts in public swimming pools and the potential impact on community associations;
- foreclosure and collection issues in Florida community associations;
- the recent Florida Supreme Court decision in Chalfonte v QBE involving insurers' liability after a storm disaster; plus
- FEMA's ill-conceived decision to disallow the rebating of flood insurance commissions to customers, taking millions out of the coffers of associations statewide.

The WLRN Topical Currents program will be taking live calls from listeners in South Florida toll-free at 1 (800) 743-9576 and from callers throughout Florida and beyond at 305-995-1800.

Again, that's this Monday, June 25th at 1pm on WLRN 91-3 FM across South Florida or streaming live on the Internet at for Topical Currents with host Joe Cooper ... I look forward to your calls!

Monday, June 4, 2012

Some of the (real) reasons banks aren't foreclosing in your community association

Why does it take so long for a lender to foreclose?

Sometimes the answer to that question depends on where you live. In very large states like California, Florida, New York and Texas, the sheer volume of foreclosures will have a delaying impact on lender foreclosures.

Our fifty states each have different rules about how to bring a foreclosure case to court and some states skip court altogether and allow for a nonjudicial foreclosure. No matter where the property is located, lenders are all required to give notice to the delinquent owner and many try to work out payment arrangements before filing for a foreclosure. Some states require lenders to demonstrate that the borrowers are at least three payments or ninety days behind in their mortgage before taking legal action. In other states, however, such proof is not a requirement and in states with the most lender-friendly laws, lenders can evict a person and sell a home within ninety days of the borrower missing the first payment.

We all hear the grumblings that banks aren't foreclosing but what are some the reasons for those delays beyond the general assumption that lenders do not want underperforming assets on their books?

Some delays are caused by a pattern of borrowers missing some payments but making others. Lenders typically prefer to enter into a payment plan as opposed to taking on all the costs associated with a foreclosure, even an uncontested one. However, if the payment plan is breached, the lender will typically move forward but it could be months or years behind schedule thanks to the payment plan.

If the delinquent owner files for bankruptcy protection, all bets for a swift foreclosure action are off. The lender and all other creditors will be halted from any further foreclosure proceedings until the automatic stay period has passed. The bankruptcy court's proceedings may delay the lender's foreclosure for many months.

The bank may have such a backlog of foreclosure cases that it is some time before the lender’s agents are able to pursue a foreclosure against a particular borrower. Moreover, properties that can be easily sold will be the first targets of a bank foreclosure rather than those properties in less desirable areas or with little or no equity.

The lender may have trouble locating its orginal promissory note. In one case that gained notoriety, a retired Boca Raton CPA staved off a bank foreclosure for more than 8 years because his original promissory note was lost. Florida law says a person not in possession of a note must prove its terms and the right to enforce it. Frankly, that can take some time to do if you find yourself in the precarious position of not having the note which forms the basis for your foreclosure action!

More and more borrowers are finding the funds needed to pay mortgage defense attorneys to keep a bank foreclosure on hold for years (see the example discussed above)! These mortgage defense attorneys will look for holes in the bank's action and there are plenty to be found. Remember that huge stack of mortgage papers that you signed on the day you bought your home? If the Truth In Lending Statement contained inaccuracies or there were other RESPA violations, that can be just the angle a defense attorney needs to put the bank foreclosure on hold or permanently derail it. Moreover, given the "robo signing" scandal and the subsequent collapse of several law firms that handled massive volumes of bank foreclosures, defense attorneys are now digging deeper into the documents use by lenders to foreclose and even scrutinizing the credentials of the folks preparing and signing those documents.

The foregoing highlights the ongoing hurdles (some self created and others beyond a bank's control) which are delaying, stalling and derailing bank foreclosures. Some of the banks we have seen with the biggest problems in this regard: Bank of America, Countrywide, Wells Fargo, Wachovia, IndyMac, Citi Mortgage, Chase, GMAC and OneWest.