Advise Members Without Running Afoul of Law
As a community association manager, a large part of your time can be taken up with questions from directors and members that require a response. While you might want to provide as much helpful information as you can, be aware that this area can be fraught with risk for you and your management company.
Avoiding the Practice of Law
Giving what you think of as a detailed and helpful response could be seen as “the practice of law” under certain circumstances, which could subject you to penalties. Comprehensive association management training emphasizes avoiding the practice of law with examples of what can be risky topics. But training doesn’t always cover what might come up in the normal course of business on a day-to-day basis. A manager might need to respond to a board member or a unit owner regarding issues with the operation of the association, rules that are in place, or language in the declaration. But interpreting passages in the bylaws could be seen as the manager practicing law, when in reality, the manager is simply providing information but doesn’t want to have to check with the association’s attorney for every simple thing, which is cost prohibitive.
There is a happy medium though. When a member asks a legal question, the manager should specifically tell the member that she is not the association’s attorney and can’t practice law when asked about items that walk the line between managerial and legal. When a director or the whole board asks the manager for legal advice, the manager should say that it needs to see the association’s attorney.
Don’t Play Role of ‘Debt Collector’
Acting as a debt collector when a member is delinquent can result in serious consequences under the Fair Debt Collection Practices Act (FDCPA). But you can fulfill your duties as a manager without running afoul of the law. Before implementing a collection policy, the association should ask its attorney to make sure that it meets the requirements of the specific association and that it doesn’t cross a line for purposes of FDCPA. And the manager should always defer to the attorney for debt collection once the initial stages have taken place and the account is turned over to counsel for formal collection. That is, sending reminder notices and late notices is permissible, but anything beyond that, including answering phone calls from the member, is a danger zone.
For more tips on how to avoid claims that you’re practicing law or acting as a debt collector, plus a helpful practice of law advisory, see “How to Avoid Liability for 'Practice of Law' and Debt Collection,” available to subscribers here.