Whoever heard of such a thing? That a manager should inspect the trusses of a clubhouse roof or that a manager should know the condition of the trusses before its purchase by the association? Are you kidding? And you are going to sue me because the roof caved in, and you think it’s my fault? What the heck? How could I have known about the condition of the roof at closing? Are you serious? But as you know, just about anybody can sue anybody these days.
Thankfully, in this case, the lawsuit was dropped against this manager, in large part because of his detailed, monthly manager’s reports! Those reports revealed that month after month, the manager reported to the appropriate committees and board that there were issues with the walls, doors, and ceilings inside the clubhouse. Month after month, the various committees and board delayed in acting. Eventually, the roof caved in leaving the clubhouse unusable.
Other factors for the dismissal of the lawsuit against the manager were the facts that he was not a licensed general contractor, roofer, or structural engineer and was not qualified to make roof or truss inspections. Nor was the manager contractually obligated to make such inspections. A huge factor was the failure of the board of directors to require and receive a pre-purchase inspection report under seal of an architect or structural engineer.
The opposing counsel and court were apprised of the duties and responsibilities of a Florida community association manager by an expert witness, and the lawsuit was dismissed. So, let’s review some of the comments and observations in that expert witness report.
The expert witness’ report began with the definition of community association management as found in Chapter 468, Florida Statutes. It was followed by the Florida community association manager Code of Ethics contained in the Florida Administrative Code Rules.
A community association manager or a community association management firm is licensed to provide management services for associations. Section 468.431(2), Florida Statutes, states, “Community association management” means any of the following practices requiring substantial specialized knowledge, judgment, and managerial skill when done for remuneration and when the association or associations served contain more than 10 units or have an annual budget or budgets in excess of $100,000: controlling or disbursing funds of a community association, preparing budgets or other financial documents for a community association, assisting in the noticing or conduct of community association meetings, and coordinating maintenance for the residential development and other day-to-day services involved with the operation of a community association. A person who performs clerical or ministerial functions under the direct supervision and control of a licensed manager or who is charged only with performing the maintenance of a community association and who does not assist in any of the management services described in this subsection is not required to be licensed under this part.
Code of Ethics (as of 1/31/2014)
Community association managers must adhere to a code of ethics that is contained in Rule 61E14-2.001, Standards of Professional Conduct, the violations of which constitute gross misconduct or gross negligence and can be subject to disciplinary measures. Several relevant portions are as follows:
Rule 61E14-2.001(1)(a) states: The word “control” … shall specifically exclude a licensee’s relationship with a community association, its board of directors, any committee thereof or any member of any board or committee.
Rule 61E14-2.001(3), states: A licensee shall undertake to perform only those community association management services, which he or it can reasonably expect to complete with professional competence.
Rule 61E14-2.001(8)(b) states (in part): A licensee shall not perform, agree to perform, or hold himself or itself out as being qualified to perform any services, which, under the laws of the State of Florida or of the United States, are to be performed only by a person or entity holding the requisite license for same, unless the licensee also holds such license or registration….
Unauthorized Practice of Law
The 1996 Court decision, The Florida Bar re Advisory Opinion Activities of Community Association Managers, places certain limitations on managers’ duties. That Court found the following activities to be the unlicensed practice of law; particular emphasis is placed on items E and F in this case:
E. Addressing questions asking for the application of law to specific matters being considered; and
F. Advising community associations whether a course of action is authorized by law or rule.
There is no authority, administrative or otherwise, requiring community association managers to inspect trusses or other hidden structural components. Typically, each community has its own customized checklist for items such as air conditioning filters, testing smoke alarms, inspecting elevator rooms, pool decks and furniture, telephone rooms, outside stairwells, and roof access doors, etc., which would not include an inspection of trusses or other hidden structural components.
Based upon the documents reviewed, including sworn testimony of the manager, the manager maintained the clubhouse using good maintenance practices required of a community association manager.
It is common practice for the board of directors to require a pre-purchase inspection report (similar to the turnover inspection report required by statute for a condominium association) when real property is purchased such as the clubhouse at issue in this case or when a community is “turned over” from the developer. This practice fulfills the board’s fiduciary duty to the association.
The pre-purchase inspection report becomes part of the official records belonging to the association at turnover or purchase. The report is under seal of an architect or engineer authorized to practice in this state, attesting to required maintenance, useful life, and replacement costs of major structural components.
The reason this report is so necessary is because the board of directors needs a base line for calculating the reserves for future capital expenditures and deferred maintenance. Without the base line provided by the pre-purchase or turnover inspection report, the board will likely be guessing as to the adequate amount of reserve funds and the replacement timeframes. To underestimate the timeframe or miscalculate the reserve funds could be seen as a failure by the board of directors to perform its fiduciary duty.
It is incumbent upon the board of directors of a community association to act in the best interest of the homeowners association, including requiring a pre-purchase inspection report before purchase. Regardless of how the purchase came about and regardless of their history with the building or the management company, it is not the duty of a community association manager to require such report.
A manager reports maintenance and management issues through a chain of command as set forth by contract.
The chain of command for the manager was spelled out in the management contract. The manager reported to the chairperson of the clubhouse committee, or in his absence, the association president. The manager was in constant contact with the committee and appropriately reported the issues to that committee. Once reported, the duty shifted to the committee to report that issue and other issues to the board of directors, which then had the ultimate authority to act.
Pursuant to the management contract, the manager had no authority to make structural changes to the association’s property or to make major alterations or additions to the buildings or equipment. The manager could not make expenditures of more than $500 without the prior consent of the association.
Based upon the documents and facts, the manager acted in a manner that any reasonable CAM would be expected to act and within the scope of the community association management contract. The manager is not responsible for inspecting trusses. The manager through his chain of command reported obvious issues to the committee as documented month after month in his manager’s reports. The manager acted properly, within his role as CAM, by not holding himself out to be a roofing contractor, general contractor, or structural engineer. A CAM should not attempt to perform any of those services.
Importantly, because of the UPL issues, a Florida community association manager is not permitted to give certain advice to the board of directors, such as advising community associations whether a course of action is authorized by law. Furthermore, pursuant to the Florida Statutes and the Florida Administrative Code relating to Florida community association managers, as it is commonly understood in the industry, a manager is not responsible for the actions of a board of directors or any committees.
It is common within the community association industry in Florida to say “the buck stops with the board.” The board of directors appears to have failed in its fiduciary duty when it did not require a pre-purchase inspection report.
Moral of the story—managers, when you are tempted to skip that written monthly manager’s report to the board or shorten it with bulleted points, expecting to fill in the gaps verbally, don’t do it! In this case, the consistent, thorough, and written monthly manager’s report spelled victory for this manager!
By the way—Who remembers when this magazine was called Manager’s Report? Be the first to e-mail me, and I’ll send you a PDF of Boardmanship.
Author’s Bio: Betsy Barbieux, CAM, CFCAM, guides managers, board members, and service providers in handling daily operations of their communities while at the same time dealing with different communication styles, difficult personalities, and conflict. Effective communication and efficient management are her goals. For more than 15 years, Betsy has educated thousands of managers, directors, and service providers. She is your trainer for life!Betsy is the author of Boardmanship, a columnist in the Florida Community Association Journal, and member of the Regulatory Council for Community Association Managers. For more information, contact Betsy@FloridaCAMSchools.com, (352) 326-8365, or www.FloridaCAMSchools.com.<< Back