Board won't reveal attorney's letter re: maintenance

Started by KerryL1 • 13 replies • 890 views

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KerryL1 (California)
Posts: 14,550

Posted:

I served on our board until 10/18 & didn't seek reelection due to a secretive board. Here is just one example, but I don't really know what is correct.

Our CC&Rs are a little ambiguous about who should repair our high rise condo balconies. IMO, they say Owners are responsible. And our rules & regs, say Owners must use the same tile materials and color if they repair their balconies.

The board said at an open meeting the other day that a letter from our HOA attorney states that the HOA is responsible for the repairs. Owners asked for a copy. The board refused by saying it's a matter of attorney-client privilege. I know some matters would fall into this category. But info about maintenance of our exclusive use balconies???

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Again I always say when you want the HOA to pay for something, that means ALL the homeowners pay. That means a possible raise in dues or a special assessment. Which lends me to say the HOA decides if it is an individual responsibility or a HOA one. If the majority of members say "HOA pays" then EVERYONE ponies up their fair share to contribute to the common area.

Now it's a hard call on the balconies. The HOA has to decide if that is "Common area" or it's owner. If it's owner, then it's exclusive area. Which exclusive area limits the HOA from managing a bit of. If it's common, then the HOA does manage it. If they manage it, then they pay for it.

So the attorney's letter most likely says that in effect. If it's visible to ALL owners/accessible, the HOA responsibility. If not so visible/attached then owner.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Kerry,

The board is probably not handing out the letter because of other information it may contain. Rarely does an attorney give a simple answer.

AugustinD
Posts: 5,144

Posted:

Kerry, think I get what you are saying. At times I have been similarly frustrated when a board would not release the HOA attorney's reasoning in the past. But I figure your opaque-leaning board believes that, in the extreme for example, if a member dares to sue claiming the HOA is inappropriately spending money on repairing balconies, arguing balconies are individual members' responsibility, then the letter would not be disclos-able in discovery due to attorney-client privilege.

I think you posted sometime in the last year or so that the board had plans to repair multiple balconies (or a related exterior feature?) in major phases, whether the balcony (or feature) needed it or not? I bet it's an enormous expense. I might be vexed as well.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By KerryL1 on 02/13/2019 6:33 PM
The board refused by saying it's a matter of attorney-client privilege.

Sounds like a crock. If there were other privileged parts of the letter then they should be redacted and the attorney's opinion on the balconies should be made available to the owners.

KerryL1 (California)
Posts: 14,550

Posted:

I'm trying to avoid the really long posts we see here and didn't mean to be too terse.

Yes, it's the situation where the Board wants all 360 steel & concrete tiled balconies in our 200+ unit high rise scraped to the concrete and replaced with a different surface for $1,000,000, a quarter of our reserves.

I agree with Tim that there might be (though, I doubt it) something in the opinion that should remain privileged. But Geno's point makes sense. These areas can easily be redacted.

I don't think I understand discoverable. in this case. Are you saying, Augustine, that when (not if) an owners sues the HOA about this matter, the attorney's letter cannot be used in court? If not, how will the board try to prove that they used due diligence in deciding whether the owners or the HOA pays?

(Please don't anybody start taking about whether or not these balconies 'REALLY' need this work--that's not what i want to learn.)

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By KerryL1 on 02/15/2019 1:09 PM
I don't think I understand discoverable. in this case. Are you saying, Augustine, that when (not if) an owners sues the HOA about this matter, the attorney's letter cannot be used in court? If not, how will the board try to prove that they used due diligence in deciding whether the owners or the HOA pays?

I am not sure the Board has to do anything to prove they used due diligence other than have its directors state, under oath, that the HOA attorney was consulted. Then maybe produce invoices from the attorney. Attorneys' invoices usually state in general terms what the topic of billing is.

Boards do not have to do what an attorney advises. If they do not, then the HOA attorney is still obliged to defend the Board's position (short of a board behaving criminally, of course). It's the same for City Councils: A City Attorney will defend whatever position a City Council takes, until and if the City Council changes its mind.

If Boards were required to prove due diligence by producing actual opinions from their attorneys, then I think this would stifle frank communications between the attorney and board. This would not be good.

I keep in mind that any written communication between the Board and the HOA attorney may indicate where the HOA is vulnerable, legally.

The "when (not if)" in your post made me laugh aloud. But I am sorry this major conflict has arisen.

Would you like to share the exact wording from your governing documents on the subject of responsibility for ownership? If it's looking like a group of you are going to send letters of demand and possibly take the condo to court, then you know folks here are ready to assist. Especially someone like you -- a straight shooter who tries to follow the governing documents, do right by the law and your condo community, and has given much time to your condo.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Kerry

I would push for a "redacted" copy of the "opinion" and it is only an opinion and like a nose, everyone has one. If you do not like the opinion, seek another for a different attorney and proceed.

If others do not like the opinion, then band them together and fight it.

KerryL1 (California)
Posts: 14,550

Posted:

I'm in a time crunch at the moment. I think what our "small group" of owners wants to do is have an attorney interpret our docs and, assuming we're correct, write a letter to the Board telling them to stop proceeding (do not sign a contract with the vendor) on this project because it conflicts with our governing docs. Is that a demand letter, Augustine? I know nothing about such things. I ran into the phrase "breach of governing documents." Is that relevant? If the Board purposely ignores our docs, is that malfeasance (as RoyalP has pined out a few times)?

From our Community Handbook (Rules & Regs), a governing doc in my HOA: “The Board of Directors has the authority to require Owners to restore the attractive appearance to these areas. Only the original paint color may be used, and only the original tile and paver colors and materials may be used for replacement.”
This flows from and clarifies our CC&Rs about Maintenance Obligations of Owners:

CC&R 8.1.3: “Any such maintenance, repair or replacement [by Owners] of any the foregoing which is visible from outside of a Unit shall be in conformance with the existing design, aesthetics and architecture of the Project and shall be approved by the Architectural Committee.” Note, the ARC has no authority to approve something that is NOT in conformance with the existing aesthetics.

Our CC&R article about the Association's Maintenance Obligations has nothing in it about repairing or replacing balcony surfaces. Our original reserves had no line items to repair or replace these areas.

Btw, in CA, we owners can get copies of invoices, so I should be able to get a copy of the invoice for an attorney's "quick opinion" via email on this topic. I read it while on the board and it's deeply flawed. Only cites one Article section. Wasn't even done by our "regular" GC, but a colleague who doesn't specialize in HOA law. I suspect that this is the "opinion" the board is referring to.

thanks!

AugustinD
Posts: 5,144

Posted:

Kerry, thank you for the citations. I agree with your group's position. Given the dollar figure, I agree with how important this is. I suggest having your group's attorney start with something like a 'demand letter lite.' See below. The citations are from the davis-stirling.com law firm's site, where it discusses the board's duties. Alternatively you could re-draft the email to be a letter from your group and see if you can get some reason out of the condo attorney without spending money on an attorney just yet. If your group writes the letter, then send the letter certified mail, return receipt requested. CC the board.

For now I would not expend time on how the board has or has not consulted experts.
----------------------

Draft Email from Members' Attorney Directly To Condominium Attorney:

Mr. / Ms. _________,

This email is on behalf of Condominium members ______, _______. ____., and ____. These members asked me to review the issue of the Condominium board complying with its governing documents and its fiduciary duty. These members advise me that over their objections the Board recently passed a policy purporting to have the Condominium repair the exteriors of balconies, at a cost to the Condominium of approximately one million dollars. I understand that you represent the Association.

It appears that the Condominium's CC&R's at Section 8.1.3 provide that each owner of an individual unit has the maintenance responsibility for her or his balcony. The Condominium's rules at Section __________ indicate similar. None of the Condominium's Reserve Studies have included maintenance or repair of the balconies as a line item. The Board does not seem to have authority to override the CC&R’s. See Posey v. Leavitt (1991) 229 Cal.App.3d 1236. The Condominium Board also has a fiduciary relationship with its members obliging them to comply with the Condominium’s governing documents and act in the best interests of the corporation. See Cohen v. Kite Hill Community Association, (1983) 142 Cal.App.3d 642; Raven’s Cove Townhomes, Inc., v. Knuppe Development Co. (1981) 114 Cal.App.3d 783; and Frances T. v. Village Green Owners’ Association (1986) 42 Cal.3d 490. Please review this matter and let me know if indeed the Condominium's Board intends to repair the exteriors of all balconies, in apparent violation of the Condominium's CC&R's, and having never in the past budgeted for this expense. We would appreciate hearing back from you about this matter by March 1, 2019.

John Doe
Attorney-at-law
Make-It-Happen Law Firm
City, CA
Phone
email

KerryL1 (California)
Posts: 14,550

Posted:

'Thank much, Augustine! Davis-Stirling.com is sacred text to me, and I somehow didn't look in the right place there for guidance. I'll visit soon as I finish here and read the case law too.

I'll tweak the sample letter to fit our HOA. Btw, the developer did NOT have the balcony interiors on the original Reserves Study. When we hired a new hot shot reserves analyst in '14 or '15, he added that line item along with several others. (Our % funded took a big hit.)

Key words are "maintenance," "repair" & "replace." Art. 8.1 IS Maintenance* Obligations of Owners." Art. 8.1 at section 1 is: "Owners' Responsibilities.
Subject to any provision of the Governing Documents, each Owner shall maintain, repair and replace in good conditions the following:"
(a) - (g). 8.1.1(g) states "The maintenance of the decking including the interior surfaces of any Exclusive Use Balcony Area... provided, however, that the Association shall maintain, repair and replace the exterior..."

The emailed "quick opinion" from our GC's colleague insists that because (g) only uses the word "maintain," Owners aren't responsible for these interiors.* But, we argue, the whole Article is about "Maintenance," and "repair" & "replace" does not have to be written over and over. Another example of all three is 8.2 "Failure to Maintain. If an Owner fails to maintain the Owner's unit and items as provide above or make repairs thereto ... "the board shall give written notice to such Owner..." stating what maintenance or repair is needed. If the Owners fails to carry out "such maintenance or repair" within a certain period of time, the Board "shall" cure the work to be done and bill the Owner an Enforcement Assessment.

Btw, I noticed last evening on our mailroom bulletin board, the notice that the board will meeting in Ex. Sess. Tuesday at 1pm. The only agenda item in Contract in formation. I can only assume it's about this topic now that we've put the board on notice in various ways that we disagree with their interpretation of our gov. docs. It's possible they've sought something more formal that a "quick opinion" via email. I'll send three directors where our group's thinking is now and state that we will not accept any option that doesn't includes CC&Rs 8.1.1, etc., in it.

Based on what you wrote, Augustine, it looks like our HOA attorney is obliged to defend whatever path the board majority chooses even if they haven't committed to it? And our GC thinks they're wrong? won't our GC advise the Board to adhere to our docs?

* Based on his interpretation of Civ. 4775, which was effective 1/17. We disagree given how many time all three words, maintain, repair & replace are used in 8.1.
we think the heading Maintenance Obligations of Owners encompasses repair & replace.

AugustinD
Posts: 5,144

Posted:

Yes, the HOA attorney is obliged to defend any decision the board makes. Though I would not rule out the possibility that the HOA attorney and board will have further discussions before signing any contract. Especially if a small group of members starts threatening suit.

If the GC (a.k.a. HOA attorney) thinks they are wrong, then he is obliged to keep that a confidential matter, protected by attorney-client privilege, and do the best he can to defend the board's position.

Upstate of me and not long ago, a City Council made a decision about how elections would be performed. Many thought the decision was unlawful. In a public hearing, the City Councillors asked the City Attorney, in so many words, what was right. The City Attorney responded: 'My office will defend whatever decision the City Council makes.' Behind closed doors, protected by attorney-client privilege, he may have laid out pros and cons of all permutations of the decision.

As I think you know, the board's signing a contract for this will intensively complicate any effort your group may undertake to stop this. Because a third party, like a vendor, wants his/her money.

If I am reading all your posts here right, it's not just that the governing documents address balcony interior maintenance under the owners' responsibility section. It is also the lacuna in the condominium's maintenance section on the subject of the interior balconies.

You indicate the meeting on Tuesday may be discussing (signing?) a contract for the balconies. I suggest your group immediately send its own letter, and not a 'demand letter lite,' asking that the board hold off while your group seeks legal advice. Add that your group is concerned about expensive litigation that will occur if the board does not hold off signing a contract until more questions are answered. Words to that effect. I think your condo is lucky to have you with your mastery of the governing documents and watching the dollars.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By AugustinD on 02/17/2019 2:47 PM
Upstate of me and not long ago, a City Council made a decision about how elections would be performed. Many thought the decision was unlawful. In a public hearing, the City Councillors asked the City Attorney, in so many words, what was right. The City Attorney responded: 'My office will defend whatever decision the City Council makes.' Behind closed doors, protected by attorney-client privilege, he may have laid out pros and cons of all permutations of the decision.

The ending to this is that the City/City Council was instantly taken to court. The City Attorney did as he said: Defended the City Council's decision as best he could, to the bitter end. This was all on the taxpayers' dime (costs of the City Attorney and the costs to the taxpayer of the court time). After six months of substantive arguments in a few court hearings, and an appeal all the way to the state supreme court, the City Council's decision was reversed. I think it's a good example of why this country needs non-profits who do legal work on the cheap.

This is just one example of the duty an attorney owes his or her clients. As long as the clients are not behaving criminally (or even if there is deniability if the clients do seem to be behaving criminally), and as long as the client is paying, an attorney has to defend the clients.

So the HOA attorney will guide Kerry's Board as best he or she can. If the HOA gets taken to court, then one day at a time, but certainly the HOA attorney will defend the board's decision as long as the Board instructs the HOA attorney to do thusly. At this point, heaven help Kerry's condominium if a major contract is signed to re-do the bacony interiors.

KerryL1 (California)
Posts: 14,550

Posted:

Augustine wrote: "it's not just that the governing documents address balcony interior maintenance under the owners' responsibility section. It is also the lacuna in the condominium's maintenance section on the subject of the interior balconies." Yes, that's correct. 8.3 is "Maintenance Obligations of Association. " As you'd expect, it lists all common areas. Re: exclusive use common areas, we see 8.3.1 (c) "maintaining the exterior of and repairing and replacing and fences, walls and railing bordering any Exclusive use ... Balcony areas..."

We argue that because the interior surfaces of the balconies are not mentioned, the Association is not responsible.

Tho' CA doesn't require that contracts be approved in an open meeting, our board policy is that they are. So we're guessing that on Tuesday, the board, with or without our GC in attendance, is going to revisit the $1m contract in formation. I'll definitely send 3 directors something tomorrow on this topic.

Thank you again for your advice, Augstine. The city case was very interesting and I now see that, for ex., our GC will do his best to advise the Board how to proceed legally and in compliance with our governing docs. But the board votes on a different course, he must defend it if we get to that stage.

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