No legal representation

Started by LindaL6 • 30 replies • 2164 views

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LindaL6 (California)
Posts: 62

Posted:

I have a LOT of questions

Our association has no legal representation; the board never gets legal advice and makes their own decisions. THe management company told them they did not ever need legal counsel. So, my question is... if there is ever a lawsuit against the association and it is clear that they got no legal counsel, will the D&O insurance policy cover them (it shouldn't). They also claim that they don't need legal advice because they have insurance.
Linda

GlenL (Ohio)
Posts: 5,491

Posted:

The Board of Trustees has a fiduciary duty to the Association and owners, and must discharge their duties in “good faith” with diligence, care and skill. As long as they don't act in a manor they know is deliberately negligent or against the law then the D&O insurance should cover them. This is not to say that they shouldn't consult with an attorney if they have questions but it is not necessary to ask the attorney every time they need to do anything.

Studies show that 5 out of 4 people have problems with fractions

LindaL6 (California)
Posts: 62

Posted:

I'm talking "NO" legal representation. I have lived here for 10 years and if an issue comes up the management company makes the decision without any legal advice. Big difference and big problem.
Linda

MicheleD (Kentucky)
Posts: 4,491

Posted:

No offense, Linda, but I don't really see anything wrong with that.

Now if your HOA were in the middle of a lawsuit and didn't have legal "representation," but rather the BOD were trying to act as the HOA's attorney, then that would be different.

But it is not at all necessary to obtain legal advice if one feels one doesn't need it.

There is very little, at this stage of our development, that we ever reach out to an attorney for.

We do send collections to them.

But unless we require a lawyer to send a resident a letter indicating the board will file suit if a specific violation is not corrected, we never ever contact our attorney.

Now, if we had a management company that sent the letters for us, and the residents in violation subsequently complied, then we would still not require legal "representation."

LindaL6 (California)
Posts: 62

Posted:

Then how else would the board even know if the actions that they take are legal; they ARE legally liable to the association. I can just see it; a homeowner files a lawsuit and the board shows up in court and says "we made our own decision... independent of any legal counsel". I can see the look on the face of the judge.

I have a real problem with ignorance; and that is the norm in these HOAs.
Linda

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By LindaL6 on 11/29/2009 6:34 PM
Then how else would the board even know if the actions that they take are legal; they ARE legally liable to the association. I can just see it; a homeowner files a lawsuit and the board shows up in court and says "we made our own decision... independent of any legal counsel". I can see the look on the face of the judge.

I have a real problem with ignorance; and that is the norm in these HOAs.
Linda

Well, how do you know that the board would not obtain legal representation if a homeowner files a lawsuit?

And it's really not "rocket science," as Glen mentioned in another post.

We make our own determination on a whole slew of items without running up the cost of an attorney to weigh in!

Granted, one doesn't always know what one doesn't know, but, for the most part, managing/administrating a Homeowner's Association doesn't necessarily involve a very steep learning curve.

You really have no idea the extent of the background and experience of each board member, do you? I mean, I have an executive background in communication. One of my fellow board members is an Information Technology executive, another is a retired contractor, and another is an accountant. We've had board members who have owned and managed their own companies (one a facilities management company and another a business solutions company).

We've had a board member who was a church treasurer (though, in the interest of full disclosure, sadly, it was this board member who ended up skimming a couple hundred dollars from the association before he left. I know. Weird.) and a board member who was an executive secretary for our local Center for the Arts.

We can get pretty far in administering the business of the association without having to rely on "attorney input" for whatever decisions we make.

LindaL6 (California)
Posts: 62

Posted:

The problem is that I DO know the background and education (or lack of) of the board members. Getting legal advice is one of the best ways of educating yourself; you canNOT make an intelligent decision without legal counsel. Give you an example; I had a major problem with a neighbor who put cement into the drainage and wreaked havoc. I GOT legal advice and my attorney wrote them a letter. THEY never got legal advice; they read one page of the governing documents and made an erroneous decision.

Legal counsel is paramount; aside from taking classes. Especially considering the fact that IT TAKES an educated attorney to be able to read and understand some of the laws. Ignorance is bliss.

Linda

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By LindaL6 on 11/29/2009 6:50 PM
you canNOT make an intelligent decision without legal counsel.

Yes. Yes you can.

There are times getting legal advice is NICE, but one can most definitely make an "intelligent decision" without legal counsel.

LindaL6 (California)
Posts: 62

Posted:

There are times; remember I am saying that we NEVER get legal counsel. So what you are saying is taking my concern out of context. Also, I just read a legal take of "reasonable inquiry" and under certain circumstances, it mandates that the board get legal counsel. Yea.... it does.
Linda

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By LindaL6 on 11/29/2009 7:02 PM
There are times; remember I am saying that we NEVER get legal counsel. So what you are saying is taking my concern out of context. Also, I just read a legal take of "reasonable inquiry" and under certain circumstances, it mandates that the board get legal counsel. Yea.... it does.
Linda

Please share that passage from your governing documents with me. That would be helpful.

LindaL6 (California)
Posts: 62

Posted:

http://condolawguru.com/2009/11/what-does-believe-or-good-faith-mean-to-directors-in-an-hoa-or-condo/

Read what Beth Grimm; a leading HOA attorney has to say about "reasonable inquiry".

Linda

DeeS1 (Michigan)
Posts: 223

Posted:

Hum ... our HOA just received it's first official "legal advise" pertaining to a bylaw clarification and our CCRs were recorded back in 2003. For the record, a simple email "informal opinion" on an ambiguous 3 sentence clause in our bylaws cost of around $450. If we wanted a real written response to send to the HO supported by case law, we were looking at over $700. As you can see, it would quickly become an exercise in the absurd -- and expense -- to run to council with every little issue. In fact, that practice alone could be considered by some as a breach of our fiduciary responsibility.

The reality is, most governing documents can be interpreted with some degree of accuracy and most HOAs have an appeal process if the HO continues to disagree. Perhaps your Board has not obtained council because they have not had anyone take formal issue with their interpretations. That's were most boards would reach out for a more formal opinion.

LindaL6 (California)
Posts: 62

Posted:

Here again..... I'm NOT talking about getting legal counsel for every issue. There are times when it is not needed; clearly times when it is needed. Otherwise, how could the board fight litigation and why would they wait until a homeowner files a lawsuit.
Linda

HB (Oregon)
Posts: 143

Posted:

I don't see anything wrong with foregoing the cost to consult an attorney. I suppose if your HOA has deep pockets, then by all means spend away, but I don't think it reflects poorly on the Board. In fact, it may be the opposite. Perhaps they are making the best decision for the neighborhood by NOT spending money on an attorney, especially if it is for normal day to day business or minor changes to your documents.

We have only consulted an attorney twice in 5 years. It was at the suggestion of our management company and the Board felt it was not a wise use of our money . . .

LindaL6 (California)
Posts: 62

Posted:

This is what Beth Grimm said about this.... which makes TOO much sense...
"Preventive legal advice often costs less than $500 - on the other hand, defending a lawsuit against the Association generally requires payment of a deductible of at least $5,000, and then Board members pay the high price of time and energy - and if there is any action by a Director that takes them out of the "good faith" category and puts them into the "willfull and intentional conduct " category that Director might find themselves billed for the costs of the defense of the legal action. Insurance companies that take on the defenses of the Association usually issue a "reservation of rights" letter that says they reserve the right to come back and pursue collection of the costs spent to defend from the Association or any of the Board members if the actions of the Board or any Director are found to be intentional or willful conduct rather than negligence, or if the event turns out to be one not covered under the policy."

Managers can learn about the law, and freely quote statutes, articles written by lawyers, and even cases to the Boards. However, when a manager starts to analyze a problem with legal ramifications and interpret how the law or a case might apply in a certain situation, he or she is stepping over the line. And a board that expects this of a manager is asking too much."

Linda

LindaL6 (California)
Posts: 62

Posted:

Not being specific, how can anybody respond to this? When a situation arises and a member addresses the board with a problem, then the board must decide whether to get legal counsel. I've said (how many times) already that I'm NOT talking about getting legal counsel for day to day business. I don't understand why this topic goes in this direction NON stop. I was very clear in my original post that our association REFUSES to EVER get legal counsel. Which is stupid.
Linda

DeeS1 (Michigan)
Posts: 223

Posted:

Well ... if you've lived there for over 10 years and there has never been a law suite, I suppose one could argue that there's never been a need for legal advice and the board's decision thus far has been sound.

I dare say that there has been no official resolution of the board to "Refuse to EVER get legal counsel" and you simply just can't predict what they would actually do if faced with the requirement. Most CCRs require a special litigation meeting of the membership for lawsuits anyway so there would be an appropriate time to tell them you think they are "stupid" if the need arose.

LindaL6 (California)
Posts: 62

Posted:

Who said that? There have been issues when I contacted an attorney and he sent a letter to the board. I already mentioned this and this topic continues to go in a different direction. Please re-read my posts.
Linda

LindaL6 (California)
Posts: 62

Posted:

They WERE faced with the requirement. An IDR was conducted. They never got any legal advice; right now we are faced with a potential safety issue and a member (who is VP of a large corporation that specializes in environmental safety) wrote them a letter. They tossed it. You don't have to have a lawsuit to have the need for legal counsel. I don't know how something so simple and straight forward seemingly can't be addressed logically.
Linda

LindaL6 (California)
Posts: 62

Posted:

A law suite??? How about a law suit. You do NOT need to wait for a law suit to get legal advice. So how is that a sound decision??? The whole purpose is to solve the problem without litigation; which is the purpose of ADR and IDR.

Where are you getting this erroneous information?
Linda

DeeS1 (Michigan)
Posts: 223

Posted:

You said "I have lived here for 10 years and if an issue comes up the management company makes the decision without any legal advice..." I'm assuming that there have been no lawsuites because you only speculate on what would happen if they show up without a lawyer.

Anyone can pay a lawyer to send a letter. The fact that there doesn't seem to be any references to lawsuites in all your post indicates that either the HO or board decided to comply with a request ... again, no lawyer necessary it would appear.

In a different post, you mentioned that the board refused to seek legal council on the matter of fire retardance applications to your complex. I honestly have to tell you, that if local ordanances and insurances policies did not require it, there's no was I would seek legal council on the matter either. I would likely seek the community's input on if it was an expense that they wanted to pay for, but there would be no reason to get council.

From what I can tell ... the topic of this post seems to be going in the SAME direction ... everyone seems to be advising you to rethink your position ... you just are not receptive to the idea.

HB (Oregon)
Posts: 143

Posted:

I agree with Dee. Legal counsel is not at all necessary to make sound decisions in an HOA, nor is it a gaurantee that you will not get sued or that you will even prevail.

The bottom line, the Board may not NEED to get legal counsel EVER and that is just fine.

LindaL6 (California)
Posts: 62

Posted:

I'm not receptive to the idea that you can't understand my original post; continually take things completely out of context and don't seem to comprehend something so simple and straight forward. There have been no law suits because nobody filed one. I came very close and I did mention it previously.

As far as the fire retardant issue; it gets a bit more complicated and anything you say is mere speculation.

Nobody asked me to rethink my position. Where did anybody say that... except you? I can't deal with this level of ignorance; sorry.
Linda

HB (Oregon)
Posts: 143

Posted:

If this is how your ocommunications go with your management company and the Board, I can see how you and they are very frustrated.
The people on this forum are trying to give you their opinion based on the information you have given.

Perhaps try re-thinking what you are asking if you do not feel you are getting the correct responses??

LindaL6 (California)
Posts: 62

Posted:

I posted a separate thread.
Linda

LindaL6 (California)
Posts: 62

Posted:

What I have gotten so far are statements like "you don't need legal counsel for every issue... day to day operations" etc. which is very frustrating. Simply because I made it very clear that that was not the issue nor was it what I presented. If you want to jump on my board's side and say that I'm the problem, that's OK. If people on this forum are trying to give their opinion, then they should make sure they read my original post in which I stated that regardless of what happens, they rely on the management company and never get legal advice. That is so simple and straight forward. If you wonder why there are so many lawsuits in these HOA's across the country and why new laws are written every year, then you could appreciate the value of legal counsel.
Linda

MaryA1 (Arizona)
Posts: 7,043

Posted:

Linda,

Perhaps you should have been more definite. Exactly what issues have come up where you think the board should have sought legal advice but didn't. Then we can offer our opinion on those particular issues. By stating the board has no legal representation, never gets legal opinions and makes their own decisions, makes us think you are saying they should get legal advice all the time. Not all assn's have an attorney on retainer nor is it imperative that they do.

I agree there are times when it's prudent to seek legal advice, but perhaps not impertive. If a member threatens to sue or actually does bring a lawsuit against the assn, the BOD should definitely seek legal representation.

Frankly, I don't believe the judge would care one way or another whether or not the BOD sought legal advice before making the decision that led them to court. In fact they may even win the case. Perhaps their actions were legal and the member was wrong!

EllenS1 (Florida)
Posts: 1,148

Posted:

You weren't asked what Beth Grimm or anyone else says. Your were asked to post the relevant section of YOUR HOA docs.

LindaL6 (California)
Posts: 62

Posted:

I posted the civil code that pertains to HOA responsibility. I offered Beth Grimm (attorney) interpretation. New laws and civil codes are not in the HOA docs They change every year. We are governed by Davis Stirling in California. Understand????
Linda

LindaL6 (California)
Posts: 62

Posted:

Quote:

Posted By MaryA1 on 11/30/2009 7:03 AM
Linda,

Perhaps you should have been more definite. Exactly what issues have come up where you think the board should have sought legal advice but didn't. Then we can offer our opinion on those particular issues. By stating the board has no legal representation, never gets legal opinions and makes their own decisions, makes us think you are saying they should get legal advice all the time. Not all assn's have an attorney on retainer nor is it imperative that they do.

>>>>Then maybe you should ask instead of putting words in my mouth >>>>>

I agree there are times when it's prudent to seek legal advice, but perhaps not impertive. If a member threatens to sue or actually does bring a lawsuit against the assn, the BOD should definitely seek legal representation.

Frankly, I don't believe the judge would care one way or another whether or not the BOD sought legal advice before making the decision that led them to court. In fact they may even win the case. Perhaps their actions were legal and the member was wrong!

>>>> That's absolutely the most ludicrous thing that I have ever heard >>>>
Linda

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By LindaL6 on 11/29/2009 7:11 PM
http://condolawguru.com/2009/11/what-does-believe-or-good-faith-mean-to-directors-in-an-hoa-or-condo/

Read what Beth Grimm; a leading HOA attorney has to say about "reasonable inquiry".

Linda

I'm sorry, this does not appear to be a link to your governing documents.

Please share with us where, in your governing documents, that obtaining "legal opinions" is mandatory.

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