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NEW LAW PROVIDES HIGH
STANDARDS FOR COMMUNITY ASSOCIATION MANAGERS
By
Eric Glazer, Esq.
Published
May 5, 2014
The Florida Legislature just passed a new
bill that creates high standards for Florida’s community
association managers and management companies. The Governor is
expected to sign it. Here is what the law says:
468.4334 Professional practice standards;
liability
(1) A community association manager or a
community association management firm are deemed to act as an
agent on behalf of a community association as principal within
the scope of authority authorized by a written contract or under
this chapter. A community association manager and a community
association management firm shall discharge duties performed on
behalf of the association as authorized by this chapter loyally,
skillfully, and diligently; dealing honestly and fairly; in good
faith; with care and full disclosure to the community
association; accounting for all funds; and not charging
unreasonable or excessive fees.
(2)(a) A contract between a community
association and a community association manager or a contract
between a community association and a community association
management firm may provide that the community association
indemnifies and holds harmless the community association manager
and the community association management firm for ordinary
negligence resulting from the manager or management firm’s act
or omission that is the result of an instruction or direction of
the community association. This paragraph does not preclude any
other negotiated indemnity or hold harmless provision.
(b) Indemnification under paragraph (a) may
not cover any act or omission that violates a criminal law;
derives an improper personal benefit, either directly or
indirectly; is grossly negligent; or is reckless, is in bad
faith, is with malicious purpose, or is in a manner exhibiting
wanton and willful disregard of human rights, safety or
property.
So what does all this
mean? Often times the association gets named as a defendant in a
lawsuit because of something the manager or management firm did,
even though the manager or management company had no written
authority to take the action they did. The plaintiff alleges
that the manager was the association’s “agent.” Now, unless that
manager or management firm had written authority to take the
action it did, they cannot be classified as an “agent” of the
association and the association is potentially off the hook for
their actions.
The new language saying that managers shall
act loyally, honestly etc… doesn’t do much. Managers were
already under an obligation to act this way under the Florida
Administrative Code including accounting for funds. Not charging
unreasonable or excessive fees sounds nice….but what does that
mean? What is reasonable or excessive? When CCFJ thought
managers were charging too much for access to records, they
helped pass legislation amending the statute to specifically
state $20.00 per hour was the max a management company can
charge. This new provision contains no such limitation.
Almost every management contract I’ve ever
seen indemnifies the manager for ordinary negligence. No
surprise or big change to the law there. It’s also doubtful that
a manager or management firm can ever be indemnified by the
association for gross negligence, recklessness, maliciousness or
for acting in bad faith. Again… no big changes.
So community association managers……all in all
it wasn’t too bad a year. Your powers at least were outlined as
we blogged about before, and you now know what you can and
cannot do. Additionally, the law now obviously treats you as
professionals and just like lawyers demands that you provide
your clients a high degree of care and that you do a quality
job. And for those of you who respect the profession and are
proud of what you do every day, that is exactly what you want.
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About
HOA & Condo Blog
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Eric Glazer graduated from the University of
Miami School of Law in 1992 after receiving a B.A. from
NYU. He is currently entering his 20th year as a
Florida
lawyer practicing |
community association law and is the owner of
Glazer and Associates, P.A. an eight attorney law firm in
Orlando
and Hollywood. For the past two years Eric has been the host of Condo Craze and
HOAs, a weekly one hour radio show on 850 WFTL. See: www.condocrazeandhoas.com.
He is the first attorney in the State of Florida
that designed a course that certifies condominium residents as
eligible to serve on a condominium Board of Directors and has
now certified more than 7,500 Floridians. He is certified as a
Circuit Court Mediator by The Florida Supreme Court and has
mediated dozens of disputes between associations and unit
owners. Finally, he recently argued the Cohn v. Grand
Condominium case before The Florida Supreme Court, which is
perhaps the single most important association law case decided
by the court in a decade.
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