Questions on HOA Attorneys

Hi, all. After living here for about a year, I was elected to our BOD as President in December 2006 and have lots of questions and issues to resolve. One issue that has come up is whether or not the BOD should hire an attorney. Here's some details.

Most of the residents are good at following the rules, but there are a handful of residents that are ignorant of a lot of things (ignorant is a strong word, but seems appropriate). The main culprit has been a problem to every BOD in the last 7 years. He keeps a work trailer in front of his home when he's not at the job, which violates a covenant about parking which specifically says work vehicles and trailers (and other stuff) have to be in the garage. Through interviews with former BOD members, it turns out that the builders had fined him around $1800 for the trailer a few years ago but he says that he made a deal with them to get those fines waived. We don't have any documentation at all on that deal, so all we can do is take his word for it. He has been sent letter after letter to move the trailer, but all we get in return is letters about how he "works 3 jobs" and is tired of us making sure "every blade of grass is in place".

We haven't fine him ourselves due to our own disorganization. All BODs up to this point have basically winged it, so there are no documents describing fines. Since we don't just want to shoot from the hip, we're trying to get policies together before levying fine to anyone.

Anyway, one solution that I've thought of for our wonderful neighbor is to get a lawyer involved. This idea expanded after doing some reading here to include having a lawyer get involved in other things like collecting dues as well as the fines when we get them documented. Can someone from an HOA that uses a lawyer give their 2 cents? Is it easy to find a lawyer to work with? How much will one cost us? Retainer? Is a lawyer effective in fees and fine collection?

Any insight is appreciated. Thanks a lot.

-- Aaron

Aaron - I assume you will be just as energetic in pursuing each and every other violation by all members in your association. Otherwise this fellow would have a great case of selective enforcement to use against you. Harold

Remember lawyers cost ALL the homeowners. The HOA's budget comes from ONLY the members. So you may want to get a consesus before spending this expense. Most attorney's charge a retainer, plus hourly rate, consulting fees, and any letters they must write. Be careful about leaving your name for them to call you back or emailing them. My lawyer charged me $23 for each email or phone call!!! ALL legal because that is considered "consultation" which isn't necessarily "free" once hired.

You will need a BUSINESS/Contractual lawyer. One that is familiar with Corporate laws and/or contracts. Your NOT dealing with Real Estate here as many think. Your dealing with contractual law and corporate.

I wouldn't hire an attorney full time. Maybe a case by case basis. I have to go to work but I would read a few posts on here to give you more advice. There is a little contraversey on levying fines. Most states don't allow for fines to be the basis of lien/foreclosure. So it may be useless overall to place a lien on someone especially if you think they will "fight" it.

I would suggest keep reading posts here that may help you with figuring out your HOA. Read your documentation. Post questions you have here. Everything you need to know is in your documentation and should put you in the right direction.

Aaron - Recommend hiring an attorney, but also recommend sending this owner a 1st letter of notification requesting adherence to the covenant, condition or restriction (cc&r) that prohibits his activity. The letter should outline the cc&r, the violation, and the necessary remedy, as well as a window of opportunity for compliance and the result if compliance is not met within that window. You should state that there will be fines if compliance is not met, and what those fines will be. Fines should not be a maximum of what is allowed in your state. Prior to referring the matter to your attorney, you should give the owner an opportunity to meet for an ADR (alternative dispute resolution) procedure. The Board should not be involved in an ADR procedure, they can not be judge and jury. Therefore, you should reach out to a local HOA and develop a reciprocal ADR program where you dispute their ADR, they dispute yours.

Nice post Jeffrey. I agree with you.

JeffreyB - I espouse to the kill-em with kindness approach, you write a valid argument. I believe that hiring an attorney to resolve violations to cc&r's is an unfortunate use of Association time or money. If I had my druthers I'd prefer otherwise. However, I firmly believe there are times when an an attorney is necessary, and an HOA should have one at their use. Violations to cc&r's is not high on my list for use of an attorney. I agree there are more neighborly methods to resolve matters than an attorney, liens, etc. However, neighborliness cuts both ways, violators are disrespecting everyone in the HOA. In the case of Aaron, the owner snubbed his nose at the Board by stating he is tired of the Board making sure "every blade of grass is in place".

I don't have a preference for threats, or courts. However, I don't believe in bargaining with and rewarding violators, especially arrogant ones, that ignore resolution requests from the Board. Do you provide beer and lunch to owners for their compliance to the cc&r's? Why provide special treatment to those that do not comply? It sets a bad precedent. As long as the Board is being reasonable in their request, I believe in the HOA writing a firm letter to the violator, documenting the occurrence in writing and a method to resolve the matter and an outcome if they do not. 100% compliance is unrealistic, every blade of grass can not be in place, however that is not what we are talking about and the owner should be put in his place.

I agree that the board hires the attorney for the HOA. They are the only ones that can in the HOA since they were elected to control the budget. The attorney they hire represents ALL the owner's in a GROUP and NOT as an individual. So if you decide to sue your HOA, your also suing yourself and your neighbors.

My response to anyone threatening to sue the HOA, is go ahead. It's cheaper and much more beneficial for the HOA to file a countersuit. Let the owner bring on their own expenses. BOTH sides should have enough evidence on their side regardless to win their case. Whatever the person suing is suing for, they have to provide you with their evidence anyways. It's part of "Discovery". This gives a fair chance for BOTH sides to bring in supporting evidence of their case.

Many HOA members fear "Lawsuit". It's just part of the endless cycle that can get started in a HOA. The HOA fears so much about being sued they hire an attorney regardless of need. Homeowner's think the HOA must have "lots of money" if they can afford an attorney. If that is the case, "then it's okay for me to sue, I should win money. The HOA is covered". So they may go ahead and threaten lawsuit, which in turns fires up the HOA to use their attorney to head off the case. So now you have the HOA using money out of their budget/dues money to hire a lawyer to defend itself against a homeowner who's paying the dues to be a member of the HOA. Once this cycle starts, it's nearly impossible to stop it. The HOA is always going to keep an attorney around because they start relying on them too much to do anything otherwise.

A HOA is setup to govern itself by it's owners not only for funding itself. Hence why there are the rules and restrictions. These rules and restrictions are created and voted on by the members of the HOA. They can also be changed by the members of the HOA by majority vote. If you don't like a rule in the HOA, you can always put forth the effort to change it. With enough supporters and know-how, the HOA rules can be whatever the majority of homeowner's want them to be.

Aaron:

I have been involved in our HOA since its inception over 10 years ago. We have been through 3 lawyers. The first one was "hired" because he was a friend of a friend of a friend of a board member. However, he was not very responsive or responsible to our CC&Rs. I don't really think he knew much about HOAs to begin with, nor did he have any real background in contractural law. Our second lawyer was sorta "okay," but he died on a snorkeling trip at the Great Barrier Reef (weird, huh? he went into the water and never came back out.)

Our third attorney is excellent. We use him for violation notices IF THE RESIDENT HAS IGNORED THE FIRST 2 NOTICES WE SEND. He does not get involved unless we cannot effect compliance with our own "reminders."

If the residents STILL do not comply, he then sends a second letter that contains the copy of the complaint that will be filed that requests a judge to compel the owner to comply with the governing documents. He also makes sure they understand that the CC&Rs allow for the BOD to recover all courts costs and attorneys fees. (Each letter is $45. This year we have had to send 3 attorney letters on 3 separate issues. Last year and the year before we sent none. So it varies.)

In 10 years we have only had to make good on the litigation threat 2 times. Both times we were successful and the homeowner had to reimburse our court costs and attorneys fees, although in one case the judge did only allow for a portion of the attorneys fees.

Otherwise, the only other thing we have asked him to do is to write a hold harmless agreement. We have not decided if we will actually have him do that, we just asked him for a quote and we thought it was pretty high. ($350)

I do not recommend using an attorney for assessment collections. We are a 275-home single-family residential subdivision. Not a condo or not patio homes. We are also not a "managed community," and the BOD handles all the day-to-day functions of the HOA. We mail annual assessment notices once a year, with 2 follow up reminders. The third assessment notice is really a notice of lien pending, giving the amount and reason.

If the resident still does not pay, we file the lien. Liens in Jefferson County, Kentucky, cost $7.50 to notarize, $13.00 to file. Lien releases cost $7.50 to notarize and $13.00 to file. Because we can do that at such a low cost, and we generally only have to file about 8 to 10 a year, we do not have to pay for any one to collect, much less hire an attorney to do so.

Finally, to speak directly to your errant homeowner who parks his trailer: After numerous attempts and even fines in the early years, I would strongly recommend contacting an attorney. The resident knows that BOD is all bark and no bite. He will never comply if you do not step up to the plate and defend the governing documents.

Like it or not, it is your fiduciary duty to do so, and chances are (though I could be wrong) your CC&Rs allow for all efforts to enforce, including litigation. I would crack open that nut.

He may grudgingly comply after he gets a first letter from an attorney "reminding" him of his duty to follow the CC&Rs - the DEED restrictions -- or he may not comply until he gets a SECOND letter from the attorney that shows the complaint in black and white, including the high probability that he will have to also pay court costs, his own attorney fees, and court costs. Chances are it will never get to litigation and he will simply comply at that point.

Do not fall into the trap of counter-arguing with his sob story about "he's just a hard working guy" and that you all are over-reaching or over-enforcing, being petty, or whatever. He has brought this on himself, and he's using that rhetoric to derail your attempts.

Good luck and let us know what happens.