Attorney Client privlidge regarding governing documents

Started by WaltH1 • 34 replies • 482 views

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WaltH1 (North Carolina)
Posts: 104

Posted:

Our Board of Directors often cites "attorney client privlidge," regarding advice on our governing documents, refusing to print the policy in question and the attorney's response. Saying, "the attorney said," is there way of doing whatever they want, when they want.

This grievance was filed:

In 2021, the Blank Blank Villas Board of Directors fraudulently and knowingly offered the incorrect number vacancies, two, for the 2021 Board of Directors Election, when there Should have been five. The Board was notified of this in an unanswered grievance dated June 9, 2021. They took no action. They added a third vacancy the day of the meeting, long after nominations were accepted. and deliberately moved a Board Member, Mr. Blank Blank, to another seat slot.

The Board recently responded:

As you know, you raised this question previously and it was addressed verbally and in writing at the annual meeting last July. Therefore, after discussion with our attorney, this does not warrant any further discussion or action.

I'm in North Carolina, and my question is when an HOA's attorney is queried regarding a specific governing document, shouldn't his response, regardless of his view, be in writing along with the governing document he's commenting on?

Our By-Laws require that all our governing documents be in writing.

Need your help! Thanks, Walt

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Are you going to the HOA attorney or is the HOA? The HOA is NOT your attorney. So you do NOT go to them. Why are you asking and then not accepting anyone's answers?

Former HOA President

CathyA3 (Ohio)
Posts: 6,299

Posted:

Attorney-client privilege only matters when there is current or potential litigation in the air. If this was a settled issue, then I agree that the written opinion should be made available. But the kicker is *if this was a settled issue*. If people are still agitating over it, then if I were a board member I would assume that the issue was not settled, that homeowners are placing themselves in an adversarial position, and attorney-client privilege should apply.

As Melissa said, the HOA attorney represents the HOA, which is a corporation. The attorney does not represent individual homeowners and would risk legal sanction or other penalties if they advise homeowners.

I also agree with not revisiting a settled issue - our attorneys recommended the same thing. It's unfortunately common for people who don't like the answer to keep trying to re-litigate the same thing over and over again, often disrupting association business while doing so. Not saying that this is happening here, I can't tell from the info provided, but it is a common form of HOA dysfunction. And given that the OP's board apparently said that the issue had been addressed verbally and *in writing* at the last annual meeting, that does suggest that something like this is going on.

It's also unfortunately common for homeowners to not understand how HOAs are run and to see nefarious deeds in normal business practices. Much time, money and emotional energy can be wasted on the resulting kerfuffles.

Note: check your bylaws. If they allow nominations from the floor at the annual meeting, then that "nomination date" was probably the deadline to have your name printed on the ballot - it wouldn't stop anyone from throwing their hat into the ring. But some communities don't allow nominations from the floor, which is why I said you should check your bylaws.

WaltH1 (North Carolina)
Posts: 104

Posted:

My apologies, Melissa. See Cathy reply for more.

WaltH1 (North Carolina)
Posts: 104

Posted:

Boy did I open a can of worms! My apologies to you both Cathy & Melissa. I may have provided too much info that side tracked to real issue. The assumption is that all their info & responses are true, which is not the case and I probably shouldn't have mentioned it because it gums up the issue.

The grievance I mentioned was based on the Board's violation of our governing documents. Something they do often.

Cathy's first paragraph came close to the answer I was looking for. Again, my apologies for TMI. I truly appreciate the time you both took to respond.

The fact that the Board has violated our governing documents is a foregone collusion because their actions are contrary to the written document. The Board doesn't state any of our governing documents to backup their position. Instead, they just say, "the attorney said."

Theoretically, the attorney's opinion should mirror our governing documents. So, if the attorney's opinion is contrary to the written document, shouldn't it be in writing and available to all members of the HOA if the Board is going to use his opinion to affect policy?

In other words, "the attorney said," is usually the only response regarding the grievance. The statement is used as a shield to not discuss the issue, and, if one believes it, provides the Board an open ended platform to violate any policy we have by stating, "The attorney said."

So, again, the question is does something like this qualify for ACP?

Thank you again for your input. Walt

AugustinD
Posts: 3,698

Posted:

Concerning a North Carolina condo subject to NC 47C (from an earlier thread by the OP):

Quote:

Posted By WaltH1 on 02/26/2022 6:36 PM
I'm in North Carolina, and my question is when an HOA's attorney is queried regarding a specific governing document, shouldn't his response, regardless of his view, be in writing along with the governing document he's commenting on?

Our By-Laws require that all our governing documents be in writing.

1.
The phrase "governing docuents" means Plats, Declaration of Covenants, Conditions and Restrictions, Articles of Incorporation, Bylaws and Rules and Regulations. An attorney's interpretation of any of these is not a part of the governing documents. One reason why is that the attorney's interpretation is not the last word on the meaning of the governing documents. For example, an owner could take a condominium association to court over the association's interpretation of the governing documents, and the court might rule against the association.

2.
Else yup, a COA attorney's written or spoken opinion is not something to which owners have access unless the Board chooses to have access. see CathyA3's post. Also keep in mind that the attorney's client is the association, but the lawful spokesperson of the association is the Board. The Board decides when to consult an attorney. The Board's communications with the attorney are privileged.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By WaltH1 on 02/27/2022 7:54 AM

In other words, "the attorney said," is usually the only response regarding the grievance. The statement is used as a shield to not discuss the issue, and, if one believes it, provides the Board an open ended platform to violate any policy we have by stating, "The attorney said."

It's not an "open-ended platform." The owners are free to kick the directors off via the bylaws or statutory director removal process or at each annual election.

WaltH1 (North Carolina)
Posts: 104

Posted:

Always grateful for your input, Augustin.

WaltH1 (North Carolina)
Posts: 104

Posted:

It would seem to be that simple, but if the BOD is corrupt it can be much more difficult.

The election I've been talking about last summer should have had 5 openings but the Board, a few weeks before the meeting, announced they were taking nominations for 2 seats. No nominations from the floor allowed from the floor. On the day of the meeting they decided there were 3 openings. Maybe legal, but unethical as the number of open seats can help determine the number of people that want to run for office.
IE 2 open seats might deter some from running for office, figuring they might not have a chance.

KerryL1 (California)
Posts: 14,550

Posted:

Are there NO notice requirements for board elections in NC? Dealines, procedures, etc.?

LaskaS (Texas)
Posts: 1,025

Posted:

I hope this will save you hours of writing and searching for information on the issue.

If what you say is factually correct, then the board doesn't care if they don't follow the bylaws.
There is no enforcement agency that owners can seek help from.

When the board is limiting the fair election process. That indicates to me they will do whatever they have to , to ensure they stay in power.

I know the elections are coming up, and it appears they are only going to put two seats up for the vote.

How about looking to your documents , a recall vote is very doable. Depending on how unsatisfied the rest of the homeowners are.

How many homes are in your hoa, How many resident owners, what percentage is required to demand a special meeting to hold a recall vote of all board members?

WaltH1 (North Carolina)
Posts: 104

Posted:

You hit the nail on the head, Laska. To clarify, the 2 seat election was last July. We won't know until they ask for nominations ( sometime in June) What kind of stunt they might pull this time.

All things considered, we did have some success last year, getting good people in 2 of the 3 seats open. One was in our group, but dropped out because he

I have a small group, Laska, of "concerned Homeowners," that I have cultivated over the last 3 years. Last year we reached the 20% required to hold a special meeting, notified the Board and nothing happened. There are 88 units/owners

You're right. Our By-Laws provide for ways to remove one or more Board members, and have Special Meetings, but the don't say how. So, I guess I'm looking for either a hostile or peaceful way to overthrow a Board, legally.

One of the reasons I've turned to this site is I know I can get some answers from some who are not lawyers. It's my opinion, that everything you find online is by lawyers, for lawyers. CAI, HOA Leader, and the other group, all get their advice from lawyers. It's only natural, when you think about it, because lawyers created HOA's. They draw up the Articles of Incorporation, Declarations, and By-Laws. Then our country is full of Law Firms that specialize in repping HOA's, and what a sweet deal is that! They get paid by the very homeowners they're hired to protect the Board's from. Compounding the problem, most state legislatures are chock full of lawyers that more than likely help write the statutes that govern HOA's. This is all well and good for the many, maybe even, most Boards that are honest, follow the rules, and make every effort to run their HOA's properly.

So, find me a lawyer or organization that specializes in helping homeowners get rid of bad Boards, without litigation..No, really, find one....because I don't think they exist.

Again, Laska, thank you for you help & guidance.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By WaltH1 on 02/28/2022 8:57 AM

You're right. Our By-Laws provide for ways to remove one or more Board members, and have Special Meetings, but the don't say how.

Then your 47C need only comply with the removal directions given in the NC Condo Act 47C and the NC Nonprofit Corporation Act as follows:

https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_47C/GS_47C-3-103.pdf

https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_55A/GS_55A-8-08.pdf

https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_55A/GS_55A-8-09.pdf

Notably, from 47C:

Notwithstanding any provision of the declaration or bylaws to the contrary, the unit owners, by a majority vote of all persons present and entitled to vote at any meeting of the unit owners at
which a quorum is present, may remove any member of the executive board with or without
cause, other than members appointed by the declarant.

In short:
Get the required votes to call a meeting of the owners.
Get a quorum to attend in person or by proxy.
Get a majority of the attendees (in person or by proxy) to remove the director and replace the director, all in one vote.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

All this talk about replacing board members etc... Are there actual human beings whom want these positions? Have you or others tried to run for a position and did not get it?

Is this whole excersizes for the principal of it? This would matter if people or members in the HOA are clammering at the bit to be on the board. However if that is not the case and only "if someone wants" then this is all a mute issue

Do not battle for the principle. You battle if you want in on the principle. Are you wanting on the board? Had had to pay a transfer fee? Why is it that not following a rule at discretion so heinous you must sue everyone?

Former HOA President

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By MelissaP1 on 02/28/2022 9:30 AM
All this talk about replacing board members etc... Are there actual human beings whom want these positions? Have you or others tried to run for a position and did not get it?

Is this whole excersizes for the principal of it? This would matter if people or members in the HOA are clammering at the bit to be on the board. However if that is not the case and only "if someone wants" then this is all a mute issue

Do not battle for the principle. You battle if you want in on the principle. Are you wanting on the board? Had had to pay a transfer fee? Why is it that not following a rule at discretion so heinous you must sue everyone?

These HOA stories remind me of a couple adages: "be careful what you ask for, you may get it" and "people do their best parenting before they have children".

Clearly some directors do need to be replaced. But what can happen is that a group with a particular axe to grind find themselves in control, at which point they discover all of the things they didn't know about running a community association. Or they don't figure it out, which is worse.

People who want to take control need to understand that they will make their own share of mistakes. No way around it. And they will find themselves on the receiving end of the kinds of behavior that they were dishing out, some of it deserved and some of it not. No way around it. Board service is a humbling and eye-opening experience - if you ain't humble when you start, you will be humbled by the time it's all over with.

WaltH1 (North Carolina)
Posts: 104

Posted:

You're a Prince, Augustin, that's all there is to it! You just are`

Do you read 55-08 as I do that the majority of a quorum (34%) for us, is what it takes to get rid of one or the entire Board?

Now the nitty gritty. So I know we don't need the Board approval to call the meeting, but do they have to participate?

I'm guessing we'll need to use Robert's Rules (required) and let's say we throw one or all of the out. How do we make the transition if the current Board balks or refuses to leave?

Those are the paths one will find online.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By WaltH1 on 02/28/2022 5:21 PM

Do you read 55-08 as I do that the majority of a quorum (34%) for us, is what it takes to get rid of one or the entire Board?

I do.

Quote:

Posted By WaltH1 on 02/28/2022 5:21 PM
Now the nitty gritty. So I know we don't need the Board approval to call the meeting,

Correct. However, and as I know you know

, getting the Board's cooperation to send out the notices that they are in fact by law required to send out is the trick.

Do not think that just because you are on the correct side of the law that you will get these directors cooperating with your friendly little COA putsch.

Quote:

Posted By WaltH1 on 02/28/2022 5:21 PM
but do they have to participate?

I chose to read this the humorous way. I do not want them to participate. Do you?

The President is likely supposed to preside at any meeting of the owners. The Board does not preside, but your COA may very well have the directors sitting up front like they are in charge anyway. They're not in charge. The President and only the President is in charge, and only to the extent of ensuring an orderly meeting, preferably abiding by a strict agenda, the law, and some parliamentary procedure like Robert's Rules (whcich I think you are saying the Bylaws or state law require).

Quote:

Posted By WaltH1 on 02/28/2022 5:21 PM

I'm guessing we'll need to use Robert's Rules (required) and let's say we throw one or all of the out. How do we make the transition if the current Board balks or refuses to leave?

No one resorts to violence. Your group writes the COA attorney and see if the attorney will cooperate. Be prepared for the COA attorney to say the recall vote was flawed, so no, your group is not now in charge.

Then your group hires its own attorney. Now the two attorneys duke it out, happily swilling back gin and tonics every evening on your and your friends' dime. Court action is threatened. By this point, the annual election has arrived.

WaltH1 (North Carolina)
Posts: 104

Posted:

Are you suggesting that if no one is clamoring to be on the Board, then there is no reason to get rid of the crocked Board members?

Melissa, the exercise is simply to get rid of crocked Board members and their penchant to corrupt our election rules.

Human nature dictates that if there are, say 5 seats open, then more people will be inclined to run, as opposed to only 2 seats open, with a third tossed in the day of the election (no nominations from the floor), leading some to think, "with just 2 seats open, I don't have a chance." This is another reason why all of the available seats should ask for nominations at the same time. Common sense.

I am not and have not run for the Board. The transfer fee was just recently approved.

Is not following the rules at your discretion not heinous or dishonest?

WaltH1 (North Carolina)
Posts: 104

Posted:

Well said, Cathy.

I have heard the Board comment from time to time about profanity, rudeness, & even threats.

At no point, should anyone be less than civil to the Board or any other homeowner.

One of our long term Board members recently left the Board to take on the job of Property Manager. She had hardly started when a mega snow storm hit in mid January. She didn't waste a second acknowledging that mistakes were made, they're going to do better, and they needed our help.

That was just one of several notes from her to the homeowners that I praised her for. We have a very cordial, civil relationship. I'll send a grievance to her to forward to the Board (protocol). She does without comment. I make sure not to make any comments about the Board to her.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Walt

To who does the transfer fee go to? It is quite common form an HOA to have a "transfer" fee which goes to the HOA. Typically a 1 to 3% of the selling price.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Got to love it... Hear is my opinion and what I think needs to be done a in a letter. Now you go do what I say or will call you dumb. Better yet will brag how you stole all my ideas...

I just can't... Do the work or get out of the way...

Former HOA President

AdamL1 (UnitedStates)
Posts: 559

Posted:

Quote:

Posted By JohnC46 on 03/01/2022 10:40 AM
Walt

To who does the transfer fee go to? It is quite common form an HOA to have a "transfer" fee which goes to the HOA. Typically a 1 to 3% of the selling price.

WTF ???

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By AdamL1 on 03/01/2022 12:49 PM

WTF ???

When you purchase a condo in our community you pay .5% of the sales price to the HOA. This money goes directly into the Reserves.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

In one 750 member, standalone homes HOA I was in, there was a 1% of sales price paid to the HOA. I forget what it was called but it was paid to the Capital Improvement Fund.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JohnC46 on 03/01/2022 1:25 PM
In one 750 member, standalone homes HOA I was in, there was a 1% of sales price paid to the HOA. I forget what it was called but it was paid to the Capital Improvement Fund.

ADD ON

I support such a fee.

WaltH1 (North Carolina)
Posts: 104

Posted:

It goes to the HOA, John, and is supposed to help with expenses. I hear it's being done at other condos in the area. I support the idea, but if you missed other posts, The Board did not put it before the homeowners, as required by our ByLaws.

WaltH1 (North Carolina)
Posts: 104

Posted:

Like I say, Adam, I'm all for it. We desperately need to money to help with the mess this and previous Board got us into.

AdamL1 (UnitedStates)
Posts: 559

Posted:

Quote:

Posted By WaltH1 on 03/01/2022 1:54 PM

Like I say, Adam, I'm all for it. We desperately need to money to help with the mess this and previous Board got us into.

how much is your fee? 1-3% seems utterly insane. I would pass over a buying a house knowing I just gave myself that big of a fee on the backend.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By WaltH1 on 03/01/2022 1:54 PM

Like I say, Adam, I'm all for it. We desperately need to money to help with the mess this and previous Board got us into.

We don't call it a "transfer fee" - instead our CC&Rs refer to it a capital contribution in the amount of two months worth of assessments that goes into the reserve account. It's pretty common around here, for condos anyway. And since it's in the CC&Rs, it's not something the board can just decide to do away with.

WaltH1 (North Carolina)
Posts: 104

Posted:

Adam,

As I said, it really has nothing to do with anything. If I had to guess, I'd say they're trying to discourage investors.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

That is what you assign it to be Walt. Doesn't make it true. We considered charging a fee but voted it down. Behind the scenes many don't know about is that as President, I had to go to a few closings. There is a 25 question HUD form that has to be filled out for certain types of loans. Mostly federal backed loans like FHA, Fannie Mae, and Freddie Mac. Although now a days some other banks may incorporate it.

That meant that I had sometimes take off work. Drive across town. This took time, money, and gas out of my pocket. None of which was re-imbursed by the HOA. No the MC could not handle it as it required the HOA President signature and our corporate stamp in some cases. I usually got notice a day before the final paperwork was signed.

I did this all for free as a volunteer. Others felt this should be compensated. Either way, whomever was on the board could decide that for the HOA.

Former HOA President

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 03/01/2022 6:37 PM
That is what you assign it to be Walt. Doesn't make it true. We considered charging a fee but voted it down. Behind the scenes many don't know about is that as President, I had to go to a few closings. There is a 25 question HUD form that has to be filled out for certain types of loans. Mostly federal backed loans like FHA, Fannie Mae, and Freddie Mac. Although now a days some other banks may incorporate it.

That meant that I had sometimes take off work. Drive across town. This took time, money, and gas out of my pocket. None of which was re-imbursed by the HOA. No the MC could not handle it as it required the HOA President signature and our corporate stamp in some cases. I usually got notice a day before the final paperwork was signed.

I did this all for free as a volunteer. Others felt this should be compensated. Either way, whomever was on the board could decide that for the HOA.

I completed 8 escrow requests today. Total time 20 minutes. All done before 7am and still in my PJ's.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Good for you Max. That's not my normal job I do in life. Plus it should be added I was NOT in agreement with collecting the fee for that. It was some of the BOARD member's opinion this should be something we collected. There argument was that work was done out of personal time should be compensated. That was NOT my view but I also could not vote it down IF the board voted for it.

Former HOA President

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 03/02/2022 4:22 AM
Good for you Max. That's not my normal job I do in life. Plus it should be added I was NOT in agreement with collecting the fee for that. It was some of the BOARD member's opinion this should be something we collected. There argument was that work was done out of personal time should be compensated. That was NOT my view but I also could not vote it down IF the board voted for it.

The point I was making is there are faster and more efficient ways to manage a HOA. There are several large, self managed HOA that run very effiecntly using modern technology.

Using pen and ink now days is operating out of the stone age.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Not every HOA has an MC. Some of us are still "self managed". Doesn't mean we can't do things electronically. Just some things do still take a real live signature. Even with signing electronically that still takes time, resources, and effort. Some people would say that is worth being paid for. Others like myself, say it is part of the job. (Suck it up). Either way it is a BOARD decision to go with what they want.

Former HOA President

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