Association Attorney

Started by JudithC • 14 replies • 1959 views

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JudithC (Virginia)
Posts: 253

Posted:

Way back when, when I was interviewing candidates to be the association attorney I asked whether they viewed their job as representing the association, or representing the board. They all were firm that they were representing the association. This was important to me as I had seen what happened when an attorney simply became a mouthpiece for the board.

Question, though, if the attorney is representing the association and a member of the association contacts the attorney with alleged misbehavior of the board, who pays the attorney for his time in listening to the complaint and perhaps investigating it? Obviously the board is chary of paying someone who is telling them they are misbehaving when they wanted to keep that under wraps!

Jadedone4 (Virginia)
Posts: 495

Posted:

Judith, the attorney works for the association, by way of the board. If the board is doing something improper, I am not sure if the attorney is the correct path to seek a cure. The attorney does have a responsibility to the association/members to report to them if there are improper actions taken. However the "enforcement" mechanism resides with the association/members - via the governing documents (if handled internally), or a state municipal entity (if fraud, theft, etc) and is needed to be handled externally. The only "plus" that an HOA attorney has, is that he/she is always an "officer of the court," and as such is held to higher standard of ethics/conduct. So unlike a board, or any other entity association with the HOA, attorneys must report illegal activities to proper parties (see above for association/members vs. local municipal agents).

RobertG (Arizona)
Posts: 505

Posted:

I have gone through this process. You are correct in that the attorney represents the association. However, you are an individual if you bring action against the board which represents the association since you are effectively challenging the association. In order to get the association to use their attorneys, the board would have to authorize the attorney to take action, something I doubt the board would approve. You will need to get your own attorney if wish to proceed.

JudithC (Virginia)
Posts: 253

Posted:

Just to clarify, I am not suing our association, and if I were would not go to the association attorney.

It does seem, though, that the attorneys are in a pretty vulnerable situation. Say the board writes their own bylaw change and does not pass it through the attorney. Others reading it say "what kind of a hack do you have for the association attorney?" Say that the board disobeys the law in our state and doesn't inform homeowners of upcoming meetings, say that improper elections are held -- all of this reflect on the attorney and one might think they would like to know what is going on in their associatons. Say another attorney says to attorney "A", "I hear that your association cut out any possibility of someone running for the board at their last annual meeting" -- what does attorney "A" do? Does he talk to the board? I would think that would be reasonable, but if he talks to the board who pays for the time of that talking? The board didn't ask to be told that they were not following the law. (Obviously the question is more valid when the attorney is not on retainer -- I would assume a retainer would handle that situation)

Jadedone4 (Virginia)
Posts: 495

Posted:

Judith, actually the attorney is a "hired hand" just like any other contractor who provides services to the HOA. As I am sure that the HOA is not his sole source of income, the attorney is in a position to remove himself from a "bad/adverse situation" just as the HOA can remove a non-performing contractor.

When I hear of a good or bad HOA, I do not think of the "support staff" (MC, attorney, landscaper, etc) - I think that their is a bunch of folks in that community that either care or don't care about where they live (and have made their investments).

RogerB (Colorado)
Posts: 5,067

Posted:

Judith, I think your assumptions are not valid. The attorney is not placed in any vulnerable positiion for actions done by the Board. And it is not the "attorney's association" A retainer would make no difference, nor does an attorney unless the attorney gives written opinions which do harm to the association. Then the worst that might happen is they may lose a client.

What I think you are trying to say is that your Board is not doing a good job. That has nothing to do with attorneys.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

If you sue your HOA, your suing yourself and your neighbors. This may be the best way for me to break this down for you. You are asking the wrong question and assuming services that don't exist.
Your right that the attorney is to represent ALL the homeowners but they do NOT represent the members INDIVIDUALLY. They represent the HOA as a "group". You are a member of this "group" but an individual member. Also, if the HOA does get sued, it may be required to hire an attorney to defend themselves in court.

It's hard to give a good example because a good HOA should NEVER sue a member. The HOA have the rights to lien or foreclose which is a much better legal solution than suing. However, here's a rough example of what would happen in a lawsuit. Let's say that an owner decides to sue the HOA for a parking violation. The HOA keeps giving them notices to stop parking in the street even though the owner has 3 cars and doesn't have the room. The member/owner would go to court and file in small claims court. The HOA would have to respond to this lawsuit. In order to do this, the HOA would have to pay an attorney to represent them. To hire an attorney the board must approve the funds to pay the lawyer and respond to the case. The money for the lawyer comes from the HOA budget which is ONLY funded by the owner's dues. A HOA is ONLY funded by the owner's for the owners. Thus the dues the suing owner paid is being used by the HOA to defend themselves in the lawsuit. The case goes to court and the lawsuit is won by the homeowner. (Most likely they wouldn't win but this is a worse case scenerio). The judgement is for $10K. The HOA only has $5K in their bank account. In order for the HOA to pay the judgement, they will have to either raise dues, or have a special assessment amongst ALL the members. (This could include the suing homeowner). This then means ALL the homeowner's may have to fork over a few hundred or a few grand a piece.

This breaks down that it's not worth the effort to sue your HOA unless your willing to pay out both ends. That HOA attorney is on your side as far as defending you against lawsuits brought by disgruntle homeowner/contractors but not if your the disgruntle homeowner/contractor. You have to hire your own attorney if you want that.

Former HOA President

MicheleD (Kentucky)
Posts: 4,491

Posted:

MelissaP wrote: "It's hard to give a good example because a good HOA should NEVER sue a member. The HOA have the rights to lien or foreclose which is a much better legal solution than suing. "

With all due respect to Melissa, I felt compelled to respond to this statement.

First of all, not all HOAs have the option in either their by-laws or CC&Rs to FINE members for CC&R violations. The HOA IS expected to enforce the restrictions with whatever resources are available to it, and that INCLUDES bringing suit against a member in violation to compel compliance.

Second, the case does NOT go to Small Claims court. It probably COULD if all you were seeking was recovery of FINES, but if, as mentioned before, you do not have the options of FINES, then the case goes to circuit court. At least it does here in Kentucky.

A complaint is filed on behalf the the HOA and the member in violation is the defendant. IF the case goes to trial, then the homeowner in violation will have to prove that he/she is NOT in violation. If he/she can't, then a judge issues an injunction against whatever it is that the member is doing in violation of the CC&Rs (a "contract"), and, if the member CONTINUES to be in violation, a contempt of court order is made and the member is fined BY THE COURT XX number of $$s per day, or jail time, or whatever. The HOA does NOT receive the fine money, since that gets paid to the court as punishment for being in contempt of a court order.

The member in violation who drew the lawsuit is also very often ordered to pay the HOAs attorney fees and court costs, which is also stipulated in the CC&Rs and in both cases we've had to bring the Judge has found that to be a valid contract as well and has ordered the members who lost the cases to pay.

So a GOOD HOA, in fact, DOES use the resources available to it, including, if necessary, lawsuits.

In 10 years we have only had to resort to full litigation twice. We have had an attorney send a letter that included a copy of a Complaint that we intended to file in Circuit Court if compliance was not obtained, and in all cases except those 2, the residents ended up agreeing to compliance.

Now, because the residents know we will do what has to be done, we seldom have to get past 2 notices to most residents. Sometimes newer residents who are not aware of the history that the courts WILL uphold our Deed Restrictions will have to get the letter from the attorney. But, once they contact THEIR attorney, who talks to ours and DOES find out our legal history, we get compliance without a problem.

So, to summarize, sometimes a lawsuit IS a prudent thing to do. Hopefully, if you do one, you will never have to do another, but chances are, once the residents know that the courts uphold CC&Rs, compliance is easier to obtain from everyone.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Lawsuits are NOT a good idea for a HOA. A lawsuit is ONLY a JUDGEMENT. That means the owner can sell their property and move without paying the judgement for years. Does that sound like a good option?

A lien is also a "judgement". However, with this kind of judgement, the owner can NOT sell their property until they pay the back dues and the cost of filing the lien. Meaning the owner can't go anywhere until they pay. A much better option.

A foreclosure gets rid of the non-paying owner. It's not the money generating option. It's lucky to even break even with all the legal costs and lost income incurred during the process. It's really a last case option.

Your overlooking a MAJOR fact. MOST states do NOT allow for FINES to be the basis of a lawsuit, lien, or foreclosure. It is ONLY for the non-payment of dues. (One exception that is long to explain).

As someone who's hired a few lawyers and taken law classes, a lawsuit isn't the best solution. There are other legal options available with better teeth. Plus, most HOA violations don't involve money. It's usually rule violations. Which is hard to prove "damages" on either end.

Former HOA President

JudithC (Virginia)
Posts: 253

Posted:

I think it a little presumptious to say I am not asking the right question, when one doesn't know what I am truly worrying about here.

Melissa does point out however, what gives the association such power and leads to boards out of control -- the homeowner has very little recourse that is reasonable. Any kind of lawsuit is expensive and you are paying twice, once as a member of the association and another as the person who initiated the suit. Because most states have not instituted any kind of protection for the homeowner, boards can bush the limits as far as not obeying the state laws or the covenants that control the board. It just isn't a logical decision often to try to enforce your rights. I believe this is a serious problem for homeowner associations and one that must be addressed. With a good board it doesn't matter -- there are other boards, though, that knowingly break the law aware that the probability of anyone calling them on it is close to nil.

I am not sure how you go about getting liens without having some sort of lawsuit, and agree with Michele's post. Obviously it is preferable never to have to take a homeowner to court, BUT .... I was in charge of homeowner accounts for many years and we enforced it mostly through Warrants in Debt. That is a court case. (Never lost one either -- actually no one ever contested one). Getting our money sometimes involved attaching bank accounts. Our state does allow penalties for ARC violations and there is a whole due process procedure for that. I am hoping that the state supreme court will overturn it eventually but at the moment the association does assess penalties and then has to go to court often to collect those penalties as homeowners do seem to argue about them, as opposed to their assessments.

The small claims court has never been used by our association, and I don't believe it can be for their suits (it can be for homeowner against association but association has to be represented by an attorney). It probably depends upon the state, but one should be very careful about forcefully stating that is how things are done, when it does vary.

JudithC (Virginia)
Posts: 253

Posted:

Judgements may be filed in circuit court and the effect is the same as a lien -- it holds up the sale of the home. I would say 90% of the people pay the judgement, the other 10% you have to pursue further.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Melissa: Please read my previous post very carefully.

I am not talking about liens for collection of annual assessments. We DO file liens for non-payment of assessments. We are fortunate that we've never had to foreclose to collect.

That's not what I was talking about. I was talking about the blanket statement that a good HOA does not bring lawsuits or that lawsuits, in general, are not a good idea.

They are an excellent idea in the cases of enforcement of violations of the CC&Rs, especially if the HOA does not have the option, through either CC&Rs or the By-laws, to FINE a homeowner for CC&R violations. We cannot do that. If we tried, and then placed a lien and the person tried to sell, then they could take US to court because we had ILLEGALLY placed a lien on their title.

The "teeth" in our CC&Rs is NOT, therefore, FINES. Our CC&Rs do, however, allow us to sue to uphold the governing documents.

We had a homeowner erect an illegal (per our CC&Rs) fence. It was not only of unpermitted materials, but it was 3 layers deep (because he had large dogs), AND he had a dog run, which is also not permitted in our CC&Rs.

We could not FINE him for the violation under our CC&Rs. We sent several letters over a year or two period. We discussed it with the HOA attorney, and were left with 2 choices, ignore the fact that he would not comply, and thus weaken or invalidate our documents, OR take him to Circuit Court (NOT Small Claims court) and have a judge issue an injunction, and effectively ORDER compliance. Then, if he refuses, he is not only violating our CC&Rs, he is in Contempt of Court for ignoring a judge's order. At that point, the Court can FINE him and/or JAIL him for Contempt of Court.

To do nothing simply was not an option.

The entire legal fees were under $3,100. I suppose they could have been more, but it was most definitely the right thing to do. We ended up getting most of that back from the other part of the judgment allowing our court costs and attorney's fees.

We obtained a court-ordered compliance. When he still did not take the fence down, we were able to enter his property with a sheriff and dismantle the fence. He was billed by the vendor AND fined by the court and ultimately was forced by THEM into selling his home and moving in order to pay the judgment, court fines, and vendor's bill so that he could stay out of jail.

So, it may be that we are talking apples and oranges here. We cannot fine. But we know that a court will uphold our documents, so that is the teeth we must use when a resident just won't comply any other way.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Here I go again... Here is the LONG explaination that I didn't mention in my previous post about the OTHER option a HOA is allowed to collect. Ironically, if I had known your situation, it would have pertained. Go figure! Honestly, this other option is close to what your HOA did except without the legal system. There are similarities and probably less heartach and expense.

Here's the SECOND scenerio. Mind you I know this because of a former president who was a con-artist. He tried to use this scenerio to his "advantage" of which I didn't fall for. It's still legal and sound, just NOT in the way he was going about it. The good news is that I can use him for a perfect example!

A HOA has the right to lien for any work they do and the owner does NOT pay them back for the work. Let's say it's a violation. A person puts up a fence and the fence is NOT approved or within "spec". The owner refuses to remove the fence after several notifications. The HOA can pay someone (prefer licensed insured contractor) to come in and remove the fence at the owner's cost. The HOA will pay the "Remover" and then send the bill to the owner. If the owner refuses to pay the bill, the HOA can then Lien for this amount. It doesn't take court action to do. The HOA owns the property and can have something removed or fixed if need be if it is on their "common" property.

Let me give you the example of what our former President tried that this falls into "questionable terriotory". The former President created his own paint company. (The license and insurance a questionable status). He then approached me with this "idea". He miracolously came up with a list of homes that needed painted. He reasoned that if these homes were "painted" that would "improve" the HOA appearance and raise home values. All of which is true and is what the HOA overall purpose is. To maintain homes and make them presentable for future buyers at a desirable resale value. On the up and up his plan is a good one. No problems there and even recommend it.

We were to contact the homeowner's who's homes needed painted and inform them of their "violation". Completely within the HOA's rights. That should be done and equitably. We would contact ALL the homes that fit into the "needs painting" catagory and NOT individually. The notice the homeowner's were to get was to tell them they had 60 days to get their homes painted or the HOA would come in and do the job for them at HOA's bid rate, and send them the bill. If they refused to pay this bill or paint it the wrong color (We'd pay to repaint it), we would lien them for the unpaid debt.

We have 107 homes. About 20 of them were in need of a paint job. An average paint job costs about $1500 - $3000 K for our area and size of homes. It depends on application and type of paint used and existing damage. A pretty sizeable junk of cash for some people. Especially since our dues were only $50 a month and a few had a hard time paying that.

If you do the math, you can see an issue here. What if no one complied within the 60 days? The HOA would have to follow through with their "threat". That could mean the HOA would have to shell out a possible $40K or more.($2K X 20 homes). That wouldn't factor in the fact that it costs about $300 to file a lien in my state. Our HOA was barely floating above water and had less than $2K in savings. Even though the HOA has the right to enforce this rule, it should ALWAYS make sure it can afford to follow through with it's rights.

As you can tell, I denied the ex-president this "option". It wasn't feasable or affordable. However, what the ex-president was really trying to do was to get paid from BOTH ends. See, he was the HOA's recommended painting contractor (Not required). If someone needed a house painting source (or other handyman issues) we'd recommend him. So he'd basically get the job "upfront". However, if he didn't get the job "upfront" he wanted the HOA to force the owner to paint. He knew that the HOA would have to hire him IF the owner refused to do it on his own. (The majority of board members loved him and wouldn't consider anyone else). He'd also "up" his bill if we the HOA paid him. He'd figure we'd get the money back from the lien. (Of which the HOA paid for additionally).

So be careful. Enforcing a violation cleanup is the right of the HOA. However, there are unscrupolous contractors out there that can take advantage of this. Not to mention board members.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Carol,

This is an old thread. It is best not to reactivate old threads as laws change and what may have been good advice before may be bad advice today.

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