lawyer bills

Started by JoseS2 • 24 replies • 1554 views

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JoseS2 (California)
Posts: 27

Posted:

Can someone help me answer this question?

Member requests ADR from the board.
Board contacts attorney
attorney contacts member several times with no response from member
attorney bills association
association adds these amounts to members regular monthly dues. Member has never
spoken or answered attorney letters
member disputes these amounts
association liens member

Is this legal?

JohnB7 (South Carolina)
Posts: 176

Posted:

Yes

Member sues board for harassment - demands jury trial - wins case - laughs all the way to bank.

Also legal.

Unfortuneately, in our system, legal is whatever you can get away with.

SusanW1 (Michigan)
Posts: 5,202

Posted:

When the board contacted the attorney, he was on the books for them.

Unless the violation says that the member must pay associated lawyer fees (for example, filing a lien or some work involving collecting dues) the board has no right to bill for these services.

WAS this for an over-due assessment collection?

KirkW1 (Texas)
Posts: 1,665

Posted:

Believe it or not, not enough information. And while there is an element of truth to the "legal is what you get away with," there are some guidelines.

In Texas you can not charge an owner with legal fees until after the member has exhausted their right of appeal to the Board. Now if you had previously started enforcement action against the owner and certainly if you filed suit you would bill the owner for the attorney's time.

The only way you would stand to lose is if this pushed him into a legal challenge he would not have otherwise taken.

JoseS2 (California)
Posts: 27

Posted:

No, These fines were not for regular dues. The member asked for ADR to us, the board. We turned it to our lawyer and the lawyer wanted binding arbitration. So we went with him.
Member did not respond to lawyer he told a board member that binding arbitration was crazy for him to do. (I agree with him on this point)
Board tell PM to just add the amounts that lawyer charged to write member letters to his bill.
Memeber sends letter to PM saying these bills are wrong.
Board says we can add those amounts (less than 300.00) to his bill.
member wont pay
board liens home.
I think we are getting bad advice from a lawyer/PM or both.
Can the member sue us as a board for this?

MicheleD (Kentucky)
Posts: 4,491

Posted:

What is ADR?

KirkW1 (Texas)
Posts: 1,665

Posted:

ADR - Alternative Dispute Resolution

We still do not know enough to be able to say if you can actually charge the lawyer fees to the owner. The operant question is when was the request for ADR initiated? Was it before or after the Board started to either take legal action or fine the owner?

If it was before, then it the bill can not be passed to the owner. If this was an attempt to stop other actions that were under way then the bill can be passed on.

As for the choice of going to binding arbitration, I think your lawyer gave the advice that suited him best. Because neither side would have had to pay for a lawyer in mediation. Also, mediation fees are much less. Of course there are no guarantees, but it takes a half day to a full day. Get real, isn't it worth it to try and save both parties some money?

There is no reason (outside time) to avoid mediation. What goes on is strictly not allowed to appear in court. Thus you can't lose something for having made a suggestion in mediation. Also, there is no need for lawyers.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Sadly, this is more evidence that we are allowing lawyers run associations, and boards merely are rubber stamps that pay the bills. Kirk is correct that the lawyer gave advice best suited to the lawyer.

MaryA1 (Arizona)
Posts: 7,043

Posted:

IMO, it's standard procedure for many assn's to pass on the fees generated in collecting delinquent assessments and fines or penalties imposed for CCR violations, whether it be fees generated by the mgmt co or the attorney. My assn CCRs state: ". . .the owner shall additionally be liable for all late charges, interest and all costs, including attorneys' fees, which may be imposed or incurred by the assn or others in collecting the same including, without limitation, those incurred in connection with actions taken under any provision of Article IV below." Note Article IV is enforcement. Also, AZ state law states: "The association's lien for assessments, for charges for late payment of those assessments, for reasonable colection fees and for reasonable attorney fees and costs incurred with respect to those assessments. . ."

I would suggest thoroughly reviewing your CCRs to determine whether or not attorney fees should be passed on to the h/o. Also check for an article which outlines the collection remedies which must be met, usually before a fine or penalty can be levied. The attorney should never be involved b/4 the board has met with the h/o to hear his case. When I say the attorney should not be involved I mean to the extent of performing any service that would require charging a fee to the assn.

KirkW1 (Texas)
Posts: 1,665

Posted:

Well George,

I don't think it is strictly the lawyers. It is a combination of lawyers and property management firms. Both are quick to get the other involved as if things could only be handled a certain way.

To be honest, I think the biggest problems faced by HOAs centers on property management firms. While Roger on this board posts a very balanced view, I don't think many managers in this are are balanced. I have heard that many managers don't care to take direction from the Board in regards to inspections.

Perhaps the problem is that apathy runs so deep that even the BODs are apathetic and allow the PM companies to run the show with the lawyers. And few seem to concern themselves with trying to present a balanced view.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Kirk,

You've hit the nail on the head with your statement: "Perhaps the problem is that apathy runs so deep that even the BODs are apathetic and allow the PM companies to run the show with the lawyers."

However, I don't know that it's apathy on the part of the board member but rather just being uninformed about their duties and responsibilities. Many board members think if they have a property manager it's his job to run the show. They really don't realize they should be the boss, not the P.M.!!

JoseS2 (California)
Posts: 27

Posted:

We contacted the lawyer upon receiving the request for ADR. The member wanted to try and clear up the fines. The board says they are violating operating a business from their unit. They say they are not. So we are at a stand still of he says, she says.
We were told by the lawyer that we should do binding arbitration. THe member says they will not do binding arbitration and wanted ADR because it was low cost.

I did read our CCR's and the state law that say in CA you can't lien a member on assesments, just the regular dues. This is where the confusion comes.
I think that now a new board member has come on and wants to act as a liason between the board and member. She said she will not do anything but listen and report back the members side to the board. For all we know this may be a communication problem.

I need to know what to do. What would anyone suggest?

SusanW1 (Michigan)
Posts: 5,202

Posted:

I'd say: go for it. Let this person talk to them and report back to the board.

Some things not clear: HOW do you know that they are operating a busness out of the home? Are there cars, people, smells, trucks, noise coming from the home and someone found out they are running a business?

You would probably be surprised how many people are running businesses out of their homes.

The issue is: what are these people doing that is upsetting the other residents?

JoseS2 (California)
Posts: 27

Posted:

I would say that it has gone on for years, even before I was a board member last year. The member said that the CCR's allow them to have an administrative office, I agree to that. The problem is their truck-mid size.
The neighbors do not care, 2 of them have actually taken the time to write the board and state this. Although this was before my time I have read them.
The board did tell the entire membership last week that they will not go after this member and as far as the board is concerned this is over. But they still lien and fine. Basically it is 2 board members saying this is not worth it and 3 that say it is.
I do think we jumped the gun with the lien and think that this may piss off the member and they will now start legal against us. I do not want to be part of that so I am trying to find out the best way to handle this.
I agree that the board member should be able to be the go between so I will suggest we go ahead with this

KirkW1 (Texas)
Posts: 1,665

Posted:

I think you need to get a new lawyer. Especially if this has been going on this long. Quite honestly there is good reason for the owner to refuse binding arbitration. From what I have read, I don't know that I would volunteer for it. Unfortunately binding arbitration is an unregulated court room in which the judges are paid by the litigants directly. Now think for a minute about who the lawyer will pick. It is obvious they will pick the arbitrator who they believe to be most likely to support their cause. And the lawyer will have much better access to this knowledge then the owner.

Meanwhile of course you will pay your lawyer to represent you in the arbitration. If you go to mediation his services may not be needed.

As for the law, are you sure that you were not reading about foreclosure. For instance in Texas you can not foreclose on fines. You can place a lien. Of course laws vary from state to state, but not allowing a lien makes the fine pointless. And you are correct that the lien is much more likely to generate legal action.

I would say that you should consider mediation in this situation. Get all five members to attend the session. The cost could be split between you.

As for billing the owner for the lawyer fees, in Texas it would be a violation of the law since you had not initiated legal action before the request.

SusanW1 (Michigan)
Posts: 5,202

Posted:

What is there to mediate?

Mid-size trucks ARE or ARE NOT allowed, according to your CCRs.

The other resident's blessing on this violation has no impact on the facts.

You must obey the contractual CCRs.

JoseS2 (California)
Posts: 27

Posted:

I will look again at the CCR's and the law to see about liens and forclosures.
-The member said they had a low cost mediator. It would coust us $200.00 and them $200.00. For that price he would hear both sides, and give his suggestions. Nothing would be binding. I think this is a good deal for both sides. Considering we have spent over that amount thus far.
-Maybe we jumped the gun and were not as pro-active as we should have been as a board. 2 of us are trying to fix that. It just does not seem worth the time and money.
Thank you for your help. Have learned a lot of stuff here.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Jose,
You should live in Florida ;) because mediation is required per our "Statutes 720 under Dispute Resolution" which requires any of these sort of arguments go to mediation before it can get into the court system. It costs $250.00 for each side. If an agreement is reached, the losing side probably will be ordered to pay the others costs, including lawyer fees.

The State is desperately trying to keep all of the HOA bullstuff out of the court systems.
atutes. if there happens to be an issue where a legal judgement is imposed. By the way, have you looked under the Davis/Sterling Act to see if Cal. has such in their HOA laws?

JoseS2 (California)
Posts: 27

Posted:

I am spending the weekend reading up on the CA state laws. Davis Sterling and the CCR's. I have come to this conclusion...We have screwed up big time.
It boils down to this. We, the board, see it one way. THe member sees it another. We, as the board, should have taken the member up on ADR and not added from our attorney that it needs to be binding. I guess the board just thought that this was something for the lawyer to handle. The reading that I have done does explain that ADR would only be binding if both sides agree and then put it writing.
I have requested that the board back off and re-group, allow the board member that seems to be open and fair talk with the member and report back to us.I also know the member is open to talking to her.
We should not have added the lawyers bills onto the members regular dues and should not have done the lien. Sad thing is we were just taking the lawyer's advice thinking he was looking out for our best interest.
The point that 2 of us board members see is that these are good neighbors who keep up their home, pay their dues and seem as though they are being very patient with the board but are coming to the end of their rope.
As a board member that just came into this when I joined the board in the last couple months this stinks. I wish I would have known what was going on before I joined the board.
Thanks

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Jose,

For my money, you're doing your best and have articulated a decent plan for the way ahead.

Good luck with your efforts.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Jose,

I think there are several things the board can do to right the wrongs:

1) record a release of the lien
2) dismiss the violation for operating a home business
3) let the board member meet with the h/o to discuss the problem -- let her inform the h/o of the actions the board is willing to undertake (#1 & 2 above)
4) inform the h/o of their violation for parking a truck - cite the applicable CCR; work with them on this issue

Does the board have a collection policy for delinquent assessments and unpaid fines? If not, they should work on developing one. One thing that should be stated is that mgmt co fees and attorney's fees associated with collections will be added to the h/o's account.

KirkW1 (Texas)
Posts: 1,665

Posted:

If it were me, I would not release the lien at this point. I would send the new member to go and talk with this guy. If that person can be the mediator for free, then you have saved both sides $200. If resolution doesn't seem to be forthcoming then go to mediation.

As a note, if the home business doesn't seem to be a problem, then certainly drop the issue. If you have a rule against a truck being visible and they have a visible truck then you need to work that out.

In my opinion, you are not going to enforce a rule then it should be changed and/or removed. I realize that the changing and or removing of a rule may take time.

JoseS2 (California)
Posts: 27

Posted:

If we fined them on a home business and we drop it and go after the truck, do we have to drop the fines and start the fine process on parking over or can we continue to fine but change the violation?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By JoseS2 on 10/25/2008 8:20 PM
If we fined them on a home business and we drop it and go after the truck, do we have to drop the fines and start the fine process on parking over or can we continue to fine but change the violation?

Jose,

These are two separate issues and must be treated separately. Do your docs or state law require that the h/o meet with the board b/4 fines can be levied? That is the case here in AZ. The HOA cannot just start fining w/o first having an appeals meeting with the h/o.

KirkW1 (Texas)
Posts: 1,665

Posted:

I am with Mary on the switching issue. You have to start fresh for the truck since it is of a different nature.

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