Monday, May 3, 2010

When should your association call its attorney?

Most people don’t like to call the association attorney when times are good let alone when times are tough and money is tight. However, the old saying “penny wise and dollar foolish” holds true. There are times when you absolutely should call the association attorney prior to taking action as a board.

What situations really require such a call? Here are a few examples:

• You are entering into a contract. Any contract. Why? If a vendor has given you a contract (and 9 times out of 10 it is a one-page proposal) that agreement was drafted with the vendor’s protection in mind not yours. Vital provisions ensuring that the work is under warranty, that the contractor will finish on time, that the association will not have to pay for the contractor’s gross negligence, etc. all need to be in there and usually they’re not!

• You are hiring or firing an employee. There are all sorts of issues that must be considered prior to hiring (to protect you from a negligent hire claim down the road should the employee go on to do harm) as well as prior to firing (to protect you from possible discrimination and other claims). Don’t go this one alone.

• You are contemplating rejecting a proposed lease or purchase application. Again, this is an area fraught with potential liability if it is mishandled. You must ensure that you have the authority you think you do in this regard as well as that you have been applying your standards uniformly and routinely.

• You have been served with a lawsuit, DBPR Complaint or a Code violation. We always recommend that the law firm serve as the association’s registered agent in order to avoid any delay in sending over time sensitive matters for handling. Being named as a defendant in a lawsuit or a Code violation is one area that absolutely mandates a conference with your attorney to map out a strategy.

• You are considering a complete remodeling project for your community. What may seem absolutely necessary and advisable to the board might actually be a material alteration of the common elements or areas which requires a membership vote. Responding to a complaint from an owner after the project is completed puts you in a defensive posture; better to handle it correctly from the beginning.

• You are considering amending your documents with a restriction that might be considered controversial. Prime examples would be “55 and over” age restrictions, leasing and sale restrictions, vehicle and pet restrictions and guest occupancy restrictions among others. Any time you tell your owners what they can and can’t do with their property and the common areas, expect pushback. Consulting your attorney first will help you consider how much pushback to expect and what the board’s stance should be.

• You are considering purchasing or selling property on behalf of the association, changing the parking space designations or the boat slips assignments. All of these matters are sensitive to owners and must be handled with sensitivity.

• You want to pursue an owner for a violation. Before threatening certain action in your demand letter, please make sure you have the authority to do what you threaten. You also might have more tools at your disposal that you might employ to resolve the violation which should also be discussed in that demand. Sending a premature or incorrect demand letter puts the association in an inferior posture later in the game.

• You are served with a Recall Petition. You might not have followed the advice listed above if you find yourself on the receiving end of one of these. There are certain statutory and documentary procedures that must be strictly followed to properly effectuate recall.

• Whenever you think you should call your lawyer, follow your gut instinct and call!

2 comments:

  1. My experience shows Boards racing to their attorney for every little thing, rather than sitting down to work it out in a fair and just manner. But then again, why should they? There's no penalty against collusion with the attorney who many times completely ignores the Rules of Civil P. (and FDCPA) that requires him to conduct a reasonable inquiry that the action by the HOA has a basis in fact, and in law.

    Former chair of the AZ Supreme Court complaint committee, Daivd Dodge, wrote an article in the AZ Attorney (Bar publication) on this "overzealous" support for the HOA client.

    See June 2005 AZ Attorney, "Eye on Ethics", http://pvtgov.org/pvtgov/downloads/dodge_fiduciary.pdf

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  2. You are correct that some boards run to the attorney and incur fees for everything as well as for things that don't require that level of oversight. Knowing which matters truly require legal assistance and the monetary investment that goes along with that is a talent many boards don't possess.

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