What does a condo assoc. need a lawyer for?

Started by CindyB5 • 14 replies • 1692 views

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CindyB5 (Maryland)
Posts: 9

Posted:

Our 30 unit condo association has a 7 person board of directors. Four are returning board members, 3 are newly elected. The four are really happy to have the 3 newbies and we are all focused on being productive/not wasting our precious time. I am one of the newly elected. We had a discussion at our (my first) board meeting about selecting a lawyer for 'what if' situations. What are the most common circumstances for needing a lawyer's assistance? Amending By-laws? Developer issues like improperly installed siding (one of our problems)? Most of our condos were built 4-6 years ago. Thanks for your help.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I am not one for hiring a lawyer for lawyer sake. Although many HOA's do that as they are a volunteer organization and members uneducated in so many areas. It can cripple a HOA in my opinion and make it act as a broken record of "must consult lawyer etc...". The reality is that a HOA is run by it's members by it's member according to their own rules they created. A lawyer is an outside source to that for the most part. Not to say having a lawyer is not a bad thing, it really just depends on the capability of it's board members to understand how to run their HOA.

A lawyer to me is a tool. I don't practice law. I may know the law and can quote a million laws statutes. I am still NOT a practicing lawyer and capable of representing my HOA in court. A lawyer is often needed to file the paperwork and represent the HOA in court. Consulting one for opinion is just an option.

We used the lawyer to file liens, foreclosures, file our CC&R's/Documents, and other areas lawyers are required for. It's important to know what type of lawyer to hire. A Real Estate lawyer is NOT the type of lawyer for a HOA. A lawyer familiar with contractual/business/corporate law is best. There are specialist in HOA's but they cost more money. They are only worth the money for more serious issues.

It's just important to not depend on every decision to run to the lawyer or even your own PM. They are after all CONTRACTORS to your HOA. It is up to the board to represent the desires of their members. Members want to punish those who don't pay their fair share, then you hire a lawyer to lien/foreclose. Members want to change the CC&R's, you hire a lawyer to file the paperwork through the court system. A member wants to sue...Tell them to go ahead. Your HOA will wait for the paperwork...It is cheaper to countersue than to sue. Which means to me, a lawyer isn't needed to be aggressive but defensive...

Former HOA President

CindyB5 (Maryland)
Posts: 9

Posted:

Melissa, your answer is very helpful and we thank you.

DaveD3 (Michigan)
Posts: 796

Posted:

You need a lawyer for lawyerly things

Assuming that none of the board members are lawyers themselves, or professional HOA managers, then the lawyer can be an interpreter of rules. Not everyone on the board is going to know everything about every CCR & Bylaw. Questions may come up from time to time where the board simply doesn't know what's proper and within the rules for them, or needs to have something interpreted as to establish the intended authority of the board. In those cases, the lawyer gives their opinion on what you should/shouldn't be doing

They're also there in the event you need to amend your documents, which may mean that the docs need to be properly written and filed with the county clerk. Again, bring in the attorney for that.

Then of course you need one if they're NEEDED for legal action being taken either by or against the HOA. Hopefully that's not necessary, but it's better to have one before you need them.

I'm curious to know why your HOA doesn't already have an attorney, or why they're going through a selection process at this point.

JeanneK3 (Maryland)
Posts: 562

Posted:

Cindy:
A 30 unit HOA is going to find out quickly that they can't afford an attorney for every little thing. You and your board need to go to the CAI Bookstore (on line), buy some HOA books and educate yourselves as to how to do the right thing.
Nevertheless, it is good to have an attorney chosen for when you do need one. I believe the Bookstore even has a pamphlet on how to choose an attorney.
Jeanne

CindyB5 (Maryland)
Posts: 9

Posted:

Good information and thanks to all.

Dave, we do have an attorney. We were discussing the benefits of using a more local pool for resources and services.

Cindy

CarolR11 (Colorado)
Posts: 2,563

Posted:

Dave says it well. Whether big or small HOAs' board sometimes need an attorney to interpret their governing documents or to interpret state laws that affect HOAs.

Ours charges a $500 a year retainer and deals with our Board's phone calls for free. Written opinions, of course, are a different story.

We hired a different law firm for construction defect litigation, Cindy.

DaisyS (Kansas)
Posts: 1

Posted:

Would love to get your thoughts on our live one-on-one legal advice platform http://www.expertbooth.com/Legal-Services/

You can contact me at [email protected]

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By DaisyS on 08/09/2012 3:06 AM
Would love to get your thoughts on our live one-on-one legal advice platform http://www.expertbooth.com/Legal-Services/

You can contact me at [email protected]

You asked for feedback. Here is mine.

Under the Legal Services heading, I found no category for HOA law. The closest match was Real Estate. Six names popped up. Three of the six identify themselves as attorneys practicing in New Jersey. One claims to be an attorney from Florida but does not identify himself by name. One person is a paralegal, not an attorney, from California and the remaining person identifies himself with only a screen name. So of your six "experts" only three could be verified as being attorneys, and none of them appears to be licensed to practice in my state.

A director has a duty to his association to act as a reasonable person would in a similar situation. A reasonable person on a board of directors seeking legal advice for his corporation would not go to an internet website to get advice from someone not licensed to practice law in their home state.

DaveD3 (Michigan)
Posts: 796

Posted:

Well said Larry.
I'll add that one might also need an attorney after seeking/following legal advice from a non-attorney that spams online forums.

JM10 (California)
Posts: 503

Posted:

If you are taken to court, don't depend upon the lawyer of your insurance agent. The insurance agent is looking out for the insurance company and even then may not really know that much about condo law.

The insurance agent who "helped" our board cost the insurance company more money than necessary because of his lack of basic HOA law knowledge...heck even his lack of basic legal knowledge regarding what is contempt of court.

We expect the insurance premium to go up when renewal comes around (unless the company drops us all together).

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

(unless the company drops us all together).

Typically, once you make an HOA claim, the insurance company will drop you. Depends on the claim. Less likely to drop you if it was a personal injury claim.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Not sure why you would go through your insurance to begin with. Usually you would pick your own lawyer then claim the award to the insurance company if any. The HOA would most likely obsorb the lawyer costs but the award/judgement would then be paid off by the insurer.

If it was an insurance type claim to begin with like property damage/personal injury, then I could see the insurance being involved with that. However, that would work similar to a homeowner's insurance claim or auto accident. Sometimes one can claim the damage on their insurance and then the insurance company uses their own insurance to pursue the other party. I am not sure if that is what happened.

Even insurance can't cover every award. It caps off at a certain amount. You would be surprised at how little that cap is. A million dollar policy does NOT mean a million dollars paid out. Our policy capped off around 80K. If the award was more than that, then a special assessment of the owners would be required. Hence why I always say when you sue your HOA you sue yourself and your neighbors....

Former HOA President

GlenL (Ohio)
Posts: 5,491

Posted:

Melissa, I would assume they are referring to D & O insurance.

Studies show that 5 out of 4 people have problems with fractions

JM10 (California)
Posts: 503

Posted:

To SteveM9:

We're pretty sure the insurance company will drop our association as what happened and continues to happen is unreasonable and could probably be considered willful misconduct. However, the board doesn't seem to understand they don't have a right to make rules that violate state laws.

At the beginning of the lawsuit, the board assured the other members we had a weak case (this is when they should have consulted a real lawyer not one they refuse to name even to our lawyer) and then wrote (in a newsletter they emailed everyone but us) that even if we did have legal standing the insurance would pay for everything. The board didn't consider that this might have a consequence for them.

To answer the original question, this is when a lawyer should have been consulted. The board could have avoided three trips to court (we are contemplating a fourth for contempt of court as neither judgment in our favor has been fulfilled), time off of work and the expense associated.

Further, if the insurance agent had conducted himself more ethically, meaning that the insurance agent (Farmers and Truck Exchange) broke the initial agreement we signed and had encouraged the board to go against the judge's rulings, the insurance would have incurred less expense and settled sooner.

If the board had consulted with a lawyer, they would have been better off.

The expense of a lawyer should compare to the expense of problems of not consulting with a lawyer.

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