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Who Does the HOA Attorney Represent

Started by JohnC46 • 16 replies • 6077 views

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JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote for an ongoing legal battle:

Our position is that a lawyer who represents an HOA represents the entire membership of that association and the entity, as opposed to a couple of minority owners who happen to be on that board of directors at the time he represents them.

Comments, opinions, etc.
CarolR11 (Colorado)
Posts: 2,563
Posted:
I'll need to read our contract again with our HOA attorney, but if he were to represent one or two directors here, I'd be talking with my remaining fellow directors about ethical concerns.
JonD1
Posts: 2,350
Posted:
Quote:
Posted By JohnC46 on 01/31/2013 4:46 PM
Quote for an ongoing legal battle:

Our position is that a lawyer who represents an HOA represents the entire membership of that association and the entity, as opposed to a couple of minority owners who happen to be on that board of directors at the time he represents them.

Comments, opinions, etc.

Hello John:

Let me begin with a few comments abou the quote.

"Our position" would raise a few questions with me. Just who make up the "our".
And this position is not based on facts, reality, or how and HOA in fact works.

So like in many cases it is NOT how you feel things should be or based on YOUR opinions.

And then we have the attempt to degrade or lessen the "couple of minority owners" who happen to be on the Board. Well again this sounds like someones belief who has no real understanding of how an HOA operates. The "minority group" just happens to be the elected Board members. Who in many cases are elected by a majority of the property owners. They were given the position to speak for the owners in regards to the operation of the property.

Now the people responsible for the quote have been elected to what?? In regards to the HOA??? ZIPPO

And finally, most HOAs are set up as corporations. The Board is the elected body which governs the corporation. Now an HOA attorney would be hired and compensated by the Board NOT the individual property owners. The attorney would take direction and instreuction from the Board. They would serve at the pleasure of the Board not the owners.

The relationship exists between the Board and the attorney. Not the owners. So IMO this quote is way off the mark.

Sort of like any attorney who works for the Board of any corporation. They would take direction from the Board not from the individual shareholders.

Some people can't understand the relationship and feel the HOA attorney should answer to and serve them. IMO completly wrong.

Sort of like the landscaper, hired, directed and paid by the Board. Do they have any relationship business or otherwsie with the individual owners?? No.

IMO the "position" put forth is wrong and flawed.

JH3 (Maryland)
Posts: 67
Posted:
I think the quote is flawed.

There is no "US vs THEM" the HOA board is made up of homeowners, and the homeowners elect the board.

The attorney represents the association, and therefore takes direction from the board.

The ONLY caveat to this is if the board is doing something against the law, or something unethical, then the attorney would represent the association vs the offending board member(s). Otherwise, the attorney does what the board tells them to do.
SheliaH (Indiana)
Posts: 6,964
Posted:
I would think the HOA attorney wouldn't represent the individual board members, as he/she represents the HOA as an entity (which, of course, consists of all the homeowners - including the ones on the board). Therefore, if the individual board members were being sued, the directors and officers portion of the Association's master insurance policy would kick in.

We have a situation in southern Indiana (Jeffersonville) where a few board members are being sued by the state Attorney Generalbecause their conduct bordered on criminality (Google "The Harbors" if you'd like more details - I don't have a link at the moment). As part of that lawsuit, the AG is asking the court to require that the board members hire their own attorney to defend themselves and not tap into the D & O coverage. Stay tuned to see how that turns out
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
MelissaP1 (Alabama)
Posts: 13,836
Posted:
You beat me to that point Sheila. It's a misconception about that. A HOA only really needs a lawyer to represent them in court. However, there are instances such as updating documents and filing liens that they may be required. That still is filed at a court house to be official court approved documents.

The lawyer does indeed represent the WHOLE of the HOA. Since the Board are elected/appointed representative of the HOA, they do the most interaction and paying of the lawyer. That is where the line typically gets blurred. The BOD may think the lawyer represents them the board. The owners may think they are a source available to them. That is why only one officer should be chosen to represent the HOA in communicating to the lawyer IMO. It controls costs and misinformation.

Now onto what people think that the lawyer would represent the BOD member if they would get sued as an individual. Not exactly. It would be the insurance company's lawyer. It would work more like an insurance claim. Now if the HOA itself decides to sue the individual BOD member for misconduct (Like theft, damages...etc.). This gets a bit complicated. The HOA attorney would still represent the board/HOA but NOT the individual. That individual would have to find their own attorney. So it's akin to my old advice "Suing your HOA is suing yourself and your neighbors". This would be the BOD member is on one level paying the HOA to sue them.

All in all, the best practice is for everyone to know and understand their own rules of their HOA. 95% of the issues can be handled IN-HOUSE without ever needing a lawyer. I find that many HOA's who do have a lawyer on speed dial are just overlawyered and frozen in place. Education goes a long ways before needing to go to that 3rd outside source of a lawyer.
Former HOA President
TimB4 (Tennessee)
Posts: 21,061
Posted:
The Association is a separate entity from the membership
The membership elects individuals to serve as Directors
The Directors make the decisions for and exercise the authority of the Association
An Attorney represents their client
An Attorney hired by the Association would represent the interests of the Association at the direction of the BOD.

Here are some interesting articles on the topic:

Whom does the condo or HOA attorney really represent? 2012 SunSentinel Article

HOA Attorneys 2012 article by lawyers.com

GlenL (Ohio)
Posts: 5,491
Posted:
Shelia, not to get off topic but is that your area (Jeffersonville)? Because I used to haul from Jeffersonville to Cincinnati & from Washington Courthouse, OH or Delaware, OH down to Jeffersonville & Clarksville all of the time. I ask because I'm curious if they ever finished the I-65 bridge?
Studies show that 5 out of 4 people have problems with fractions
LarryB13 (Arizona)
Posts: 4,099
Posted:
When a board of directors hires an attorney to represent the association, there will always be a question as to who the actual clients are and what is and is not appropriate representation.

The board is the voice for the association and the attorney would generally be expected to represent the interests of the association as expressed by the board. Individual members may have different views but the attorney should represent the BOD's position.

The real conflicts seem to arise not in the context of homeowner vs. board but rather when board members seek to use the association's attorney as their own personal counsel. The attorney must keep in mind that his clients are the BOD of the association and not Directors 1 thru 5 personally.

There would be a clear conflict of interest if a board member requested the association's attorney to draw up a will for him at the expense of the association. The work requested is not for the benefit of the association but for a director personally.

Less clear is a situation like the one in a recent thread on this forum where the association's attorney sent letters to all homeowners to argue against a recall election of the entire BOD. The way I saw it was that the attorney had crossed the line from representing the interests of association as expressed by the board and into the realm of representing the personal interests of directors 1 thru 5.

An anology would be for the state's attorney general at state expense to send each voter a letter advocating against an election to recall the governor. In both cases, the attorney would be offering up political advice for the personal benefit of an incumbent officeholder.
JonD1
Posts: 2,350
Posted:


Less clear is a situation like the one in a recent thread on this forum where the association's attorney sent letters to all homeowners to argue against a recall election of the entire BOD. The way I saw it was that the attorney had crossed the line from representing the interests of association as expressed by the board and into the realm of representing the personal interests of directors 1 thru 5.

An anology would be for the state's attorney general at state expense to send each voter a letter advocating against an election to recall the governor. In both cases, the attorney would be offering up political advice for the personal benefit of an incumbent officeholder.

If memory serves the attorney sent out that letter in response to a recall effort and information sent out by those pushing for the recall. As we were not provided the details of the argument on either side it is impossible to determine whether the behavior or actions of the attorney covered or crossed some line.

IF there were accusations made against the Board and the Board wished to have an opportunity to clarify their side who better suited to respond? IF these accusations included legal issues before the Board who better to address them?

We were involved in several lawsuits brought against the property by unit owners. We had our attorney attend several Board meetings to address and answer the legal issues involving
these suits. Can that now be seen as improper use of the association's attorney? I think not.

And there is one glaring flaw to the attorney general anology it that case all parties are elected positions not one hiring the services of another. And there certainly is a big difference between political advice and legal representation.

In our case we used the attorney to provide a source of information providing the facts and his understanding as it pertained to the law and the handling of these suits through the legal process versus what the other parties represented.

Many owners simply have no real understanding of the relationships involvied in the operations of a typical HOA and rather than educating themselves they labor under their beliefs on how they feel things should be done.

Over the years we have had owners casll our attorney to discuss what they felt were prssing matters. And their logic was "I am paying them because I own a unit." Well that is simply not the case and the owner does NOT have any authority to OK the expenditure of HOA funds on such matters.

I am sure this discussion will not resolve the misconceptions many property owners operate under.
KevinK7 (Florida)
Posts: 1,343
Posted:
Quote:
Posted By JohnC46 on 01/31/2013 4:46 PM
Quote for an ongoing legal battle:

Our position is that a lawyer who represents an HOA represents the entire membership of that association and the entity, as opposed to a couple of minority owners who happen to be on that board of directors at the time he represents them.

Comments, opinions, etc.

I just read that article on the home page. I would have to say that in that while the lawyer does not represent the entire membership, just the interests of Tthe BOD, the interests of the association should be what is at issue. In the article regarding the Sands of Kahala Beach HOA, it seemed the BOD used their attorney and their authority to block the majority of the homeowners because of what they felt was right and the lawyer not only represented just the BOD but took advantage of them. This is why I agree with the statement that the lawyer should represent the entire membership because after all, it is the entire membership that will wind up paying for the representation and the results to follow.
SherryS2 (Washington)
Posts: 47
Posted:
This is not the exact subject but a related question.

If the BOD initiates litigation against a member, pays an attorney, settles the litigation with the member, what information is shared with the members about the settlement? How does the BOD handle the financial information regarding the litigation? Such as how much was spent on attorney fees compared to the amount collected in the settlement. If the BOD represents the membership, shouldn't this information be made available to the members. How does the treasurer indicate this expense on the financial report?

Sherry
TimB4 (Tennessee)
Posts: 21,061
Posted:
Sherry,

A lot of this will depend on State laws and your governing documents.

VA allows the Board to withhold information regarding any lot other than the individual requesting information.
My Association, using a treasurers report, discloses how many lots are x days behind or in litigation. The individual lot number is not part of the report (example: x lots are 30 days delinquent, x lots are 60 days, etc.)
My Association, using it's income/expense report, shows the total spent on legal issues but not what the issues were (however, anyone who wanted to take the time to really look through available material would be able to figure it out).

FredS7 (Arizona)
Posts: 927
Posted:
> Our position is that a lawyer who represents an HOA represents the entire membership of that association

(I'm not a lawyer but)

Seems to me that the lawyer has an ethical responsibility to work according to his client's direction (the board of directors, presumably communicated through a designated person). If asked to do something he believes is unethical or illegal the lawyer has a responsibility to withdraw.

The board of directors has a fiduciary responsibility to the homeowners. That doesn't mean they need to ask for a vote on every issue; it does mean that they have to have a reason for their decision and it must be defensible based on what they knew at the time.

The lawyer has no way of knowing what the entire membership wants.
SherryS2 (Washington)
Posts: 47
Posted:
Quote:
Posted By FredS7 on 02/01/2013 10:54 AM
> Our position is that a lawyer who represents an HOA represents the entire membership of that association

(I'm not a lawyer but)

Seems to me that the lawyer has an ethical responsibility to work according to his client's direction (the board of directors, presumably communicated through a designated person). If asked to do something he believes is unethical or illegal the lawyer has a responsibility to withdraw.

The board of directors has a fiduciary responsibility to the homeowners. That doesn't mean they need to ask for a vote on every issue; it does mean that they have to have a reason for their decision and it must be defensible based on what they knew at the time.

The lawyer has no way of knowing what the entire membership wants.

Fred,

This is a very common sense view to that question.

Sherry
DavidS63 (Florida)
Posts: 13
Posted:
FS 720.303(1) states:

"The officers and directors of an association have a fiduciary relationship to the members who are served by the association."

Therefore, in my opinion, an attorney should follow the instruction of the Board of Directors although if a question or action is requested by the Board of the attorney, the attorney should respond or act in the best possible fiduciary interests of the homeowners since it is his responsibility to ensure that the Directors maintain their fiduciary duty according to FS 720.303(1). Especially, when an attorney should reasonably be aware that the question or action requested is an increase or a decrease in the fiduciary interest of the homeowners.

AugustinD
Posts: 5,144
Posted:
Quote:
Posted By JonD1 on 02/01/2013 5:32 AM

We were involved in several lawsuits brought against the property by unit owners. We had our attorney attend several Board meetings to address and answer the legal issues involving these suits. Can that now be seen as improper use of the association's attorney? I think not.

The state bar of Michigan appeared to say otherwise in 1987, per
http://www.michbar.org/opinions/ethics/numbered_opinions/CI-1175. Syllabus:
~~~
A lawyer defending a lawsuit brought by a condominium owners' association, may not give advice other than to obtain counsel to unrepresented individual members of a condominium association not parties to the lawsuit, where there is a reasonable possibility that the interests of the unrepresented members may conflict with interests of the lawyer's client.

A lawyer's dissemination of pleadings, explanation of defenses and posture of case, and question-answer session to unrepresented members would constitute prohibited advice to persons of adverse interest.
~~~

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