Attorney fees.

When you sue the HOA your suing yourself. I've typed this a million times by now. I apologize. However, you provided the PERFECT example of what happens when a member or group of members take legal action. The board has no choice but to hire legal council. A HOA is a corporation and has to be represented by legal council in court. (Not always if board has someone competent and trustworthy to represent them in court). For the board to pay for the legal council they must take the money out of the budget. Where does that money in the budget come from? Your dues/assessment.

A HOA is ONLY funded by the owner's for the owners. The board is only elected representatives of the general membership. The general membership votes for a small group to represent them and to manage the budget on a daily basis on their behalf. A good board member must always remember the money in HOA is Everyone's money. Thus, any changes MUST be open to all member's for review. The members of the HOA have a right to know what the decision was and why the legal council was hired.

A small tidbit. Most corporations like Walmart or Enron, must provide information good or bad to their shareholders. I believe it's called a prospectus. (please correct if need be). There is an area in the stock holder's report that will inform the stockholders if the corporation has faced any legal issues or payouts due to bad actions. You can imagine the one for Enron! This goes for the same for a HOA. The members are the stockholders.

If you do sue your HOA, it is better to do it as a group like what happened with yours. However, they could have also taken a different route. They could have requested to change the rules and ammend the by-laws and CC&R's by majority vote of all the members. It's the harder route but the rules and regulations are to be maintained, created and controlled by the homeowner's themselves. If they don't like a rule, there should be a way to change it. That's by majority vote.

RobertR1 - The Board is not obligated to inform all owners of the complete issue, along with pertinent correspondence regarding legal matters. Unless your By-Laws specifiy they must do so, which I doubt. Most By-Laws have Articles that protect attorney client priveledge. You may see it in the form of something like, The Board can restrict attendance at meetings where there are matters of a legal nature in order to protect and respect the privacy of the individuals involved. Or something like that.

I take serious issue with a Board that runs to the attorney seeking legal advise everytime an issue comes up. This has happened way too many times in my community. Most if not all of "legal advice" could have be avoided it our Boards read the By-Laws and didn't seek an attorney's "interpretation" or spin on matters.

The Board should certainly budget for legal representation and disclose the amount budgeted and actual amount spent. More than that you may not get an answer or more detail but can certainly ask in a polite way and see what the Board discloses.

Attorney's fees are part of doing business in today's world. I agree with the poster who took issue with the "board running to an attorney" for every issue, when it could be reviewed/resolved by better understanding of governing documents.

Also, if the there is a challenge - from either the board, or a member - regarding "interpretation" of section of the governing documents, the board meeting is the place to resolve this, not the offices of "Dewey, Cheatem, & Howe."

Suing an HOA, is a practical and strategic move IF the HOA deserves it - when you have failure of the COMMUNITY to either reign in or control the improper actions of a renegade board - members have no other choice. Doesn't mean that it is the first and only course of action - but is it part of the arsenal that community's should have (would call it the "nuclear" action, because the prospect of everyone getting "burned" in some manner is real).

If the original poster's issue was that legal counsel was sought out to resolve an issue, and that the "small group" of members caused this need - isn't that what the same "small group" of members PAY into the HOA for...? Now PLEASE do not accept/take this to mean that every lil nit-pick that a member has should be addressed in a similar manner. You MUST have some levels of discretion and a (functioning)healthy handle on your governing documents so that when a problem is presented you can research the issue (it is HELPFUL to also have the owner/member research WITH you), for possible solutions. This does work... besides board-members need to save up the "magic pixie dust" we are given for those "really" bad emergency situations...

Seems like bully tactics by the Board and maybe their intent is to have residents turn against this member/members because it cost all members for the legal fees.

I think the Board acted inappropriately when you say "The Board responded with some vague, unspecified warning about the action of the few, and copied all owners on their reply. In this letter reference was made that the actions of the few owners were cause to expend X $ for legal fees."

Had it happen to us when we raised legitimate concerns and identified the developer had apparently screwed up registering the CCR's against all homes...next the HOA published a list of people in the subdivision that were members, those that were consulting with the Board lawyer to consider becoming members, and those of us who decided not the 'join'.

They could have accomplished the goal of identifying members by doing just that, NOT listing those of us who didn't want to join. It seems their goal was to turn some neighbours against us and it worked for some, while to other neighbours it just reaffirmed the Boards vindictiveness and stupidity.

Robert, I applaud your efforts on behalf of your COMMUNITY, and hope that at least one NEIGHBOR stops you say "thanks."

On a personal note - being "right" isn't always acknowledged by those who were previous wrong. I would not hold out for an apology from the board, or even any acknowledgement of your efforts. Sometimes doing the "right thing" when no one is watching, is the hardest thing in the world. But you know that you do NOT get credit for doing the things you are SUPPOSED to be doing.

As for the exact conversations/corespondences between the board and the attorney, I fail to see how that will impact or change matters much. We can discuss here whether or not who the "client" is in this situation (since the attorney represents the membership, by way of the board... ). But in the end, we all have ELECTED a board to REPRESENT us in these kinds of matters - I would state "for better or worse," but my wife read's posts here as well.

I do agree that a budget line item, clearly articulating the cost associated with consulting with the attorney IS appropriate and should be fully disclosed on the "books."

If your board put out that letter "admonishing" the members, it should be a directive for "regime change" during the next elections (would be remiss if I didn't state that if you had the required number of community votes, you could "recall" the board - but again that is part of the "nuclear" option in my book and too disruptive).

Take a minute or two to look into whether or not you want the "stress" of situation like this in your life. Not going to tell you to "balance" things, because only you can decide what is correct for your station in life. I will however say that if I had community members as active as you in my HOA, my job as President would be much easier. Gauge whatever levels of participation you feel are appropriate, to what you want to deal with in your life. I believe that it was Melissa that stated previously that "participation in an HOA's affairs can be a lifestyle change for some."

I was "lucky" with my HOA about legal fees and avoiding them. I paid our attorney's much like I pay my mechanics. I find out what the bad part is, buy the part, and pay the mechanic to replace it. Any legal costs we did pay wasn't for advice, it was for filing the proper paperwork and sending out letters. Things that you should pay an attorney to do since they PRACTICE the law. I am NOT a lawyer and therefore do NOT recite or quote case laws or other legal mumbo jumbo. However, that doesn't mean I don't know the law or how to translate it.

The most imporant part is NOT knowing how to recite, quote, or look up laws. It's knowing how to TRANSLATE them into "layman's terms". If I look up a rule in my CC&R's, I can read it but will I know what it means? That's a pet peeve of mine on HOA websites when a poster brags about sending their board a quote from a law source. Do you think that if your board member can't translate a by-law, they can translate case law? That's pretty much asking the board to go hire a lawyer. First thing the board members is going to think is "I don't understand this legal mumbo jumbo, I'd better contact a lawyer to protect myself, the board, and the HOA". The indication of legal action alone is enough to get a HOA board in a panic and spend your money.

My rule of thumb is if someone threatens to sue the HOA, LET THEM!!! Let the OTHER party sue FIRST. 99% of the time, it's a bunch of huey and the person trying to get a reaction. If they are serious, they will do research and contact an attorney. The HOA should just wait for the paperwork and then consider hiring a lawyer. It's MUCH cheaper to counter-sue than to sue. The HOA just has to sign some paperwork stating they plan on counter suing even if it's nothing but legal costs reimbursement. The member suing the HOA is suing themselves on one level. If they win, they lose. They may have to participate in paying a special assessment to pay off their judgement. If they lose, then they are really stuck. They have to pay their legal cost plus the HOA's if the court dictates. So anyone on a HOA board who's hearing "I am going to sue", don't panic. Make them follow through before taking action. You should have liability insurance anyways to help protect.

This is advice maybe I shouldn't be giving. It's kind of "inside" information. This information should be shared amongst board members and presidents of HOA's. They will be the one's that will encounter this situation the most. Can you tell that I've been threatened a few good times with lawsuits? I even foreclosed on a house! Now that is some legal mess you do NOT want. It came back to haunt me recently years later.

What helped me as president is the fact that I did study some law courses in college. I took criminology and business law. The two courses I would highly recommend one take if they are to be a board member/officer. It will help tremendously in interpreting the law into layman's terms. Plus, it helped me avoid lots of legal costs associated with needing advice. My lawyers worked for me. I told them what I wanted and used them to go get it since I don't have a license to practice law. The less time with lawyers in my book is less time with lawyers period.

To all who replied. I thank you each for your opinion. I have pretty much decided to just let it drop. At our last election we were able to get our candidate voted in. After seventeen years of living here I have learned a lot and felt it was my obligation to help. I did good and I did bad over the span and it will be time to move on soon. That's life and my little tale will not change anything. You all have been most gracious.

Let me just list a couple of evils about condos in resort areas, from my exposure and listed in arbitrary order on importance.

1. Be open to all and don't play games.

2. Do not allow absentee owners to run the show.

3. Make damn sure Board members know their jobs and the CC&R's.

4. Don't think because the Board is elected this endows them with special attributes.

5. Be critical of your manager, do not allow them free rein.

6. Do not allow your complex to become rental property.

7. Communicate and find ways to educate and interest owners in a personal way.

8. DO NOT forget in a condo, everything has to be done for the Real Property, not the individual.

9. Protect and treat the property as your home and expect and require all to do likewise.

10. Looking back, after seventeen years, and knowing your pittance of a reserve fund speaks volumes about poor management.

Robert, thanks for giving the full story. I hope the web site is a success. I really can't understand why the board turned it down in the first place as it takes a load off the board. If someone needs a form, they can go to the website. Mortgage companies want copies of the CC&R's tell them it is on the website. It actually takes a load off the board. I am afraid it might be an ongoing battle with the board, as to be really good, a website needs the board cooperation and not being overly sensitive with writing style. There may be a lot of censoring they will want to do, and that might be the next battle.

As far as comments sections -- I love them myself. Bottled up complaints turn to poison in my opinion. The state of Virginia claims that the association is supposed to provide an opportunity for homeowners to meet and discuss the community that is free of charge. They seem to have forgotten the telephone. Anyhow, a comments section or a email list is a way to do that. One suggestion is to get software so that you can limit the access to members of the community for part of the comment area. This way people can write freely and there are some things that one wouldn't want broadcast to the entire world I would think!

Just a quick comment on an earlier post about boards running to attorneys for advice too often. Boards are subject to fiduciary duty, which is one of the highest obligations under the law. At the same time, they are untrained volunteers, many starting with no knowledge of how to run the HOA. These two facts put the board in a precarious position: High responsibility + Limited knowledge + High liability

I can see why boards would err on the side of seeking too much legal and other professional advice, rather than saving some money by not doing so. The community will be quick to hold the board responsible for problems, so it's only reasonable that they get the advice they need and only reasonable for the community to pay for it.

One other comment. We hear quite often here that 'Suing the HOA is suing yourself', which is true. However, that's very little deterrent to stop lawsuits. Why? Let's say you have a community of 300 homes and you sue your HOA to collect damages. You are awarded $30,000 in damages for whatever the issue was. You get a check for $30,000 and your part of the HOA special assessment to cover that loss is only $100 ($30,000 / 300 homes). Of course, I doubt the court would also make you pay the $100 either. So, you did just fine by 'suing yourself' :-) [Not enouraging lawsuits here, just giving boards another angle to consider]

Just another way to look at it....

I forgot this bit of irony.
When the web site was being set up by this small group one of the things we did was Google our Regime Name. Yo and behold there is another Condo with our name or like name, and they have a Web Site with the name in it. So we decided to use dot info, instead of dot.com or net or whatever.

We may all go to jail, who knows.

Brad,
We have beeen through foreclosure several times. The minute the owner does not pay any monies due Regime have lawyer file a lien. Then either the Board or Manager or Lawyer make it their job to monitor process. Some of these will probably be covered in CC&R's but don't expect your interests to be protected. You must register your part in the foreclosure and that means you must get in line to get paid. Some time where you end up in line is dependent on how well you follow the process and adjust to proceedings, because the party doing the foreclosure can do all kinds of tricks. Also do not allow occupancy of the unit, if money is owed, especially don't allow place to be rented unless they agree to give you the money. Take notes because it appears this foreclosure business is just getting started. No wonder with no doc loans, interest only loans, flippers, arms, ballons and now the bubble seems to be starting to burst. Add to that this Internet way of securing loans. I read the other day these Internet Loan Companies (some of them) absoluitely know what their rate of loan failure will be and their business is geared to absorb this figure. If events happen outside this prediction, what is happening now will happen, bad news.

Brad,
I see your problem, and I may be off base, but I believe YOU can file a mechanics lein for the $66 and list it with some kind of stipulation that lein is for current and future legal obligations. Another thing you could do is contact the party and make a strong demand for the money. It will look better for them to have a record of paying their association fees than it would if they have another lien against the property. Wouldn't hurt to try and I suppose a case could be made that if they pay their bills the association will submit a letter to the foreclosure judge attesting to this fact. These folks need all the help they can get, and you may get some money this way. Just don't sign anything. Seems here a bird in the hand is worth two in the bush.

We are fortunate to have a retired judge on our board. One of the problems with liens and foreclosures is that often, at least in kentucky, the CC&Rs or the By-laws stipulate that we cannot collect on our lien or any of the unpaid dues as a matter of fact, if the house goes into foreclosure. We can if there is a bankruptcy, but cannot, legally, during a foreclosure.

So you could probably answer your own question with a re-read of your documents.

Because we file a lien against any unpaid dues, we are automatically included on any foreclosure litigation. We just note the documents as they come in and file them away.

Sometimes the residents manage to stop the foreclosure and get back on their feet and then our lien remains intact. It only becomes void once the final judgment is made.

First or next in line on a lien or foreclosure still gets you nothing. The bank is still number 1 no matter what. Many people don't understand a few facts about foreclosures. It's NOT a money making proposition for a HOA and it also does the work of the bank in some cases. Costing the HOA the money to do the dirty work while a bank claims all the rewards.

If a bank decides to foreclose on a house in a HOA, they most likely will NOT notify the HOA. They don't have to. The announcement is in the paper and considered PUBLIC notice. Keep in mind, a house in a HOA can still be up on it's dues but be behind in mortgage payments. The bank's option is to foreclose when they do not get paid. Same for a HOA if they don't. In some scenerios, it can be a "race" to foreclose between the bank and the HOA.

IF the HOA forecloses first, the bank still is number one to get paid. That puts additional risk to the HOA when they decide to foreclose. If the owner owes the bank any money, that comes from any money raised by the foreclosure sale if any. The HOA is left with the leftovers. Basically, the HOA has incurred the legal costs and is still out the money owed them that caused the foreclosure process to begin with. The HOA's benefit is that they get rid of a non-paying member.

Now if a bank forecloses BEFORE a HOA does, the HOA had better find out quickly. The HOA should immediately put a lien on that property. That way they are atleast in "line" if any extra is made from the bank's foreclosure sale. If the owner is in bankruptsy, that may be a whole other scenerio leaving the HOA holding the bag. The HOA should still lien if that is the scenerio as well. Either way, it's not a guarantee of money. Just a way to stop the bleeding.

It's always good to keep an eye on the "legals" section of your local newspaper. That will be where the information will be on filed liens or foreclosures. The advertisement can be from the bank or HOA. Depending on who's dong the lien/foreclosure. It has to be publicly announced.

I found out about a property that was up for foreclosure from the bank by accident. I got one of those annoying "free" papers if I would sign up for service. I figured I would take the paper and read it. Turns out, I found the listing for one of the houses in our HOA being foreclosed on by the bank. The owner had loans out on a total of 5 properties and didn't pay the bank. Ours was one of the 5. I quickly called our lawyer and had a lien placed on the property. It was 2 days before the auction. We didn't get any money but we did get on the list of about 10 others owed. We had to pay $300 for the lien. It was one of those darn if we do and darn if we don't situations.

It didn't pay off for us in money, but it did in education. The next time this happened. I was more prepared. I made it routine to follow the newspaper. It helped in deciding if we should take action or let the bank do it. It helped tip the scales on how to handle the situation. If they owed use enough money (6 months dues) we would lien. If I found out they were already liend or in foreclosure with the bank, I may lien a bit earlier than the 6 months requirement. It was always a risk but letting someone skip town owing us money, wasn't a good option. You always have to factor in many issues when deciding to pursue the proper legal actions. That includes banks.

Melissa:

Actually the bank is foreclosing and notified us by serving us a court petition seeking to revoke any rights we have to collect any monies once the bank collects theirs. If we don't respond we lose our rights, my guess is even if we had a lien. It is one thing to have a lien if the owner tries to sell, but in a sheriff's sale I don't think it matters.

So the bank is trying to make the HOA give up it's rights in the sherriff's sale of any profits? I think I see what's going on. A sherriff's sale is similar to a foreclosure if not exact. With a foreclosure, the auction is held by an attorney at "outcry" on the public steps of the courthouse. A Sheriff's sale is property that is sold at auction by the sherriff's department. Not much difference except where the money funnels to.
I do wonder if this house/property was seized property by the sherrif's department? If so, was it for illegal activity? Was it failure to pay taxes? There has to be a reason for it to be under the sheriff's control rather than the normal court system. It's most likely the way things are done in your state versus mine.

If it's truly a sherrif's sale. I have a feeling they want your HOA to give up it's rights so the sheriff's department can raise funds. They may have seized the property and have agreed with the bank to sell it at their auction IF they can keep the profits outside of what the bank gets. Basically breaking in line and cutting others off. If your HOA had a lien on the property, that could be cutting into their profit.

I would still lien and not sign over the rights. Someone is trying to hoodwink ya. If there is money owed the HOA, it deserves to get paid back. Agreeing to give up the right to collect is making a collective decision on the behalf of ALL the homeowner's NOT to pursue collections. It's ALL the homeowner's money. Even yours.

It sounds like if you do refuse to sign your rights over, then the sheriff's department is still going to sell the property. They just have to pay the bank and HOA. Maybe it will make them try harder to get a higher price at auction.

To get back to the web site issue for a moment - this is a growing issue in a number of ways. Most association have not trademarked their association name and/or logo, so an owner is free to use them when setting up their own site. In an extreme case, an owner out in CA trademarked the associations name and logo and then sent them a letter demanding the association stop using his trademarked name and logo that he was going to put on T-shirts and ball caps and sell. Obvisously this one is going to be in the courts for a while. But another just appeared in the news recently here in MI where an owner used the name, logo and photos of the association entrance sign on a private web site. This is obviously going to be confusing to everyone.

First, especially if you're a larger association, get your name and logo trademarked, it's not really expensive. Second, obtain the best domain names still available, even if you're not going to build your own web site for awhile, you should at least try and nail down the domain. Third, try and get something on the web that provides regular communication to the owners. More and more people are using the web as their main, if not only, method of receiving information.

If you don't, sooner or later an owner will, and may not be as agreeable the the original author of this topic.

Joe