By Eric Glazer, Esq.
After doing this for 22 years now, I don’t get surprised that often any longer by anything that takes place in the world of condos and HOAs. This week however, I was quite surprised.
Twice in the same week, community association managers brought it to my attention that companies that do business in South Florida with community associations are offering community association managers “referral fees” for each association client the manager brings to the vendor. The offers are not discreet, they are blatant. One shows a picture of someone (presumed to be a licensed CAM ) holding a pile of hundred dollar bills. The second simply tells the manager “I will pay you……” These are not referral fees…they are kickbacks. Let’s not mince words. So now, the question becomes, is this legal and secondly, should we worry that community association managers won’t be recommending the best vendors to their associations, but only the ones that pay the manager a referral fee?
Both the condo, HOA and co-op statutes state:
An officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. Any such officer, director, or manager who knowingly so solicits, offers to accept, or accepts any thing or service of value is subject to a civil penalty pursuant to s. 718.501(1)(d).
So, Florida Statute 718, 719 and 720 are clear that a community association manager can’t get a kick back from a vendor who provides goods or services to the community. If that isn’t enough, Florida Statute 468 provides that a community association manager can face disciplinary proceedings if he or she :
Violates any provision of chapter 718, chapter 719, or chapter 720 during the course of performing community association management services pursuant to a contract with a community association.
And if that isn’t enough, remember that effective July 1st, 2014 community association managers were given the authority to perform many more tasks without being accused of practicing law without a license. In exchange for that increased responsibility, The Florida Legislature imposed new standards for community association managers and Chapter 468 now reads:
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.
If you’re a community association manager, and you receive kick backs from a vendor, good luck explaining at your disciplinary hearing that you were being loyal, were dealing honestly, fairly and in good faith and were providing full disclosure to the association you were working for.
Managers are wise to stay as far away as possible from any company dangling that carrot in the form of a kick back. Nothing is worth the loss of your license.
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