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WilliamS1 (South Carolina)
Posts: 113
Posted:
Last year, our board entered into a law suit with a home owner over use of an easement area. Our board has gone through an election cycle and now is in disagreement over worth or necessity of the law suit. The costs are leaping up every month. Most homeowners are only slightly aware of the lawsuit and are not aware of the expense but questions have begun to arise. Most informed are outraged. I am the new treasurer on the board since January. Recently I have had inquiries from homeowners directed to me as to the amount spent on the lawsuit. I have the numbers but have been advised by the attorney that "This information is subject to the attorney client privilege in my opinion and is not subject to disclosure". I have read up a little on the ACP and do not find a direct issue. I am skeptical of this attorney's judgment and motives.

Does this inquiry cross into attorney client privilege?

How can a board continue to spend large amounts of money - way out of budget - without informing the homeowners?

What is the balance between board "executive spending" and informing the owners?

What is my responsibility as treasurer to full fill my duty?

Thanks
SteveM9 (Massachusetts)
Posts: 3,699
Posted:
Quote:
"This information is subject to the attorney client privilege in my opinion and is not subject to disclosure"


Hah, he just doesnt want your HOA members to get upset and stop the lawsuit causing him loss of revenue.

Think about it, are you going to hide these legal fees when the spending report comes out? No. So you might as well issue a spending report, annual report, budget update or whatever you call it right now. Inform the members about the entire budget, just like you normally do including the legal fees portion of the budget. This way, everyone is informed, not just a select few.

Trust me, members would rather know NOW that you spent $5000 on a lawyer than know a year from now that you spent $28,000 on a lawyer. If everyone in your HOA doesnt want to fight this, it wont be fought.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
I'd stop the lawsuit process. It's a waste of time and money. Besides it's much cheaper to have pursued a lien or counter sued.

The membership should be aware of where their money is going. They may not need to know all the details of the case. They could be brought in as witnesses if they do. I would limit the lawyer's contact information because you do NOT want any members calling him. It costs money to call, email, or discuss a case. A nosy owner leaves a message representing the HOA, and the HOA is charged.

Stop the bleeding now if possible. There are other ways of dealing with this issue that are much better and don't require attorneys. Read the CC&R's and see what those options are.

Former HOA President
TimB4 (Tennessee)
Posts: 21,060
Posted:
William,

Does this inquiry cross into attorney client privilege?

Your attorney is correct that the specific information is considered attorney client privilege and not subject to disclosure. However, that does not mean that the Board is forbidden from disclosing it. It means that the Board has the option of disclosing it or not and can not be forced to if they decide to keep the information from the membership.

How can a board continue to spend large amounts of money - way out of budget - without informing the homeowners?

Now, as a corporation, you still need to account for the expenditures in your budget and financial report. Typically, these are identified as legal costs and one large lump sum is reported. This does need to be reported to the membership.

What is the balance between board "executive spending" and informing the owners?

I have never heard of "executive spending". There is executive sessions for discussing various issues, but decisions based on those sessions still need to be identified in the open. This would be the same for any and all expenditures.

What is my responsibility as treasurer to full fill my duty?

As I see it, as Treasurer, you are responsible to make an accurate report of the expenditures to the board and the membership. However, just as you group administrative expenses in one lump sum (vs. itemizing each stamp, envelope, sheet of paper, etc.) this would be done with legal expenses too.

Tim

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