Same Attorney for HOA and Developer

If your HOA has now been turned over to the homeowners and the homeowners have elected a Board of Directors, then it is now up to your elected Board of Directors to obtain the services of an attorney. Why is a developer sitting on your Board as the VP?

It sounds to me like the attorney is regarding this as an assignment separate from his HOA role, and he is asking for a retainer and an hourly fee.

It should not be necessary for you to ask this of the attorney, common property and insurance requrements should be discussed in your HOA documents.

If you did not receive CC&Rs then you have a beef with the developer.

Have you read ALL of your documents, whatever they're called? Are other things cited as common property, but not the clubhouse?

Using the developer's attorney as the HOA attorney is...well... idiotic. I suspect the developer sends more $$ his way than the HOA. I wonder who's side the attorney would be on if there was a dispute with what the developer had done.

Sounds like your Association is in transition from declarant/developer control to membership control.

Regardless, decisions are made by the majority of the Board. If the Board wants to look for a new attorney they can. If there is a question as to whom the attorney will really represent if there is an issue between the Association and the Declarant, then they should hire a new attorney.

If the Board is asking a lot of questions, then a retainer is typical. If the Board doesn't ask a lot of questions, retainers may not be required.

Our attorney gets a flat fee (less than $200) for being our registered agent. We then pay for any other services (including answering questions) on an hourly basis. I think our rate is around $300 per hour (less if the work is done by a paralegal or associate).

Then it appears that you will need to wait until the membership has more control of the Board or these members are replaced at a future election in order to get a new attorney.

As I said, decisions of the Board are by majority vote. When the Declarant is still in control of the Association, it's difficult if not impossible to have anything changed until full control is transferred to the membership.

You can certainly raise the concern of a conflict of interest. However, those concerns might not be addressed as long as the Declarant controls the Board.

Wait, Larry, parts of your post are confusing.

1. Are you saying the homeowners elected your developer VP? Usually only the board elects officers (e.g.,VP, prez), but the owners elect members of the Board--directors.

2. Are you saying that only the president hires the HOA attorney? Generally the whole board hires the HOA attorney.

3. Is the attorney really the developer's attorney, or an HOA attorney hired by the developer. Whatever the case, you should try to get support to pressure the Board to hire an HOA attorney with no ties to your developer. If construction defects exist, there are too many ways the developer-director and attorney could try to conceal them until the statutes of limitation run out. If your Board refuses to hire a different attorney, you may want to recall the board or wait until the next election and replace them

4. Somewhere in your documents are there rules about the clubhouse that residents must follow? If so, I'd say it's a common area.

5. How does your own deed of trust (or whatever they're called in TN) describe your real property and the other aspects of your HOA? Are common elements mentioned?

Your developer may have been required to file a plan with the TN Dept. of Real Estate, which would be recorded. It may have exact boundaries, etc.

I suppose the attorney can charge individual homeowners how every much he wishes. I doubt he even needs to reply to individual questions. In your current situation, owners might want to jointly ask a different qualified attorney questions and split the fee, which certainly would not include $5000!

6. And also, How many are on your board? How many total lots are there? How many are owned by the develop? By his family members? I assume your (probably) bylaws state one vote per lot??

1. The property owners elected the board of directors. I don't know who chose the officers. The declarant appointed himself and family members as officers in the previous years, so he probably appointed the officers this year as well. This was the first year that the property owners actually got to attend the HOA meeting.

2. The board hires the attorney, but the declarant controls the board members.

3. The attorney has represented the developer since 2006. We don't have construction issues, but we do have other problems that they are working together to conceal. That's why we're trying to get a new attorney. Unfortunately, there are only 21 lots and the majority of the lot owners are either friends or family of the developer. They purchased their lots when the banks foreclosed on some of the original owners.

4. I never thought about the rules for the clubhouse. I don't recall anything being written in the documents.

5. The deed doesn't mention any common property. The sales brochures represented the clubhouse as community property, but now I'm not sure that's the same thing as common property. We just want to know what we're paying for and no one will respond. It just seems fishy.

6. 3 members on board. 21 lots. 6 owned by developers. 4 owned by his family. 6 owned by his close friends. Bylaws allow 1 vote per lot.

I agree completely with Ray, its a conflict especially since there is the possibility of the developer and residents in an adversarial relationship. If the board and attorney do not agree, the Bar Association in your state will convince them otherwise.

No.

Here is a link to the Tennessee Bar Association

You were right; the Bar Association agreed. Now I'm hoping the attorney will disqualify himself from representing the development company as well, especially since one of the developer and his wife are on the board of the HOA. Thanks for the tip about the Bar Association.