NEW LAW PROVIDES HIGH STANDARDS FOR COMMUNITY ASSOCIATION MANAGERS

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 scontains 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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