Association board required to allow homeowners to review documents

Failure by a board to produce association documents requested by a homeowner in a timely manner is an unreasonable withholding, subjecting it to damages.

By Donie Vanitzian, reprinted with permission

October 14, 2012

QUESTION: I'm tired of being ripped off and getting the royal runaround from my board when I try to get the status of my account or other information that the board is obligated by law to provide. When I start talking tough I'm told to talk to the board's attorney, who in turn tells me I'm not his client so "go away, you're bothering me." Or worse, I find a $150 to $300 charge for legal fees on my account because the attorney answered my request. I think this is outrageous blackmail or extortion by a corrupt board that fails miserably in its duty of good faith, backed by the attorney who goes along with it. Does this qualify as "collusion" and "unjust enrichment" by the attorney?

ANSWER: Blackmail and extortion are criminal offenses that would require a police report and a complaint at your local district attorney's office for prosecution. Only a trial court would be able to decide what qualifies as "collusion" and "unjust enrichment" by the association's attorney.

As an owner, you have a right to demand documents, whether or not the association's attorney responds to your request. Any answer other than the date on which the documents will be produced is evidence of an unreasonable withholding, subjecting the association to damages.

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California Civil Code section 1365.2 gives titleholders the right to review and copy association documents. It requires that a written request be addressed to the board president, sent certified mail, return receipt requested, with copies also sent by regular mail to the other board directors. Do not send a copy to the association's attorney unless you have also been directed to do so in writing by the attorney.

Demand to review the documents contained in California Civil Code section 1365.2(b) within the time frames listed in that section. You should be prepared to pay copy costs, the amount of which the association must inform you about in advance. If the board does not comply by the deadlines in the code section, file an action in Small Claims Court asking for an order to produce the records, for $500 for the association's noncompliance and for the costs of filing the Small Claims Court action. An association that consistently refuses such demands, which can be made by every titleholder, creates a costly situation for all owners if lawsuits are filed.

The attorney is correct in that you are not his client, even though your association dues may be used to pay his salary. Courts have affirmed that issue. Had your own attorney contacted him, he would not be sending you or your attorney a bill. Because you have no attorney-client relationship with the association's attorney, he is not obligated to give you any advice and, therefore, cannot charge you any fees. He may try to charge the association, but it is up to the board to reject the charge because, as he points out, you are not his client.

The attorney's invoice to the board falls under the cost of doing business as an association and should be satisfied through accounts payable from the association's operating fund.

The board could include a notice with its yearly distribution of required documents, informing owners that questions for the association's attorney need to go through the board.

Class action against HOA management firms for unauthorized practice of law

AZ class action against HOA management firms for unauthorized practice of law

By George K. Staropoli

A class action suit was filed in Maricopa County, AZ against numerous HOA management firms for the unauthorized practice of law resulting from their attempts to collect HOA debts.  The two plaintiffs allege against some 30 management firms, among other things,

Upon information and belief, the Defendants represented to the public and to members of the Class that they were acting with the full measure of authority reserved for licensed legal counsel for Defendants by negotiating debt on behalf of a third party, drafting, filing and/or preparing legal papers, including liens, debt collection letters, complaints, default judgment, judgments, and other debt collections activities which require the appearance of a licensed and authorized attorney; and charging fees for the foregoing activities. . . . Defendants actions directed at these Class Members constitute the unauthorized practice of law and are clear violations of the Fair Debt Collections Practices Act and Arizona law.

Crame v. 360 Management (Maricopa County Superior Court, CV 2012-095288, Sept. 10, 2012). The case has been moved to Federal Court.

A class action is undertaken when the number of victims is so numerous and who have basically the same allegations of wrongdoing. The two plaintiffs represent the class of homeowners who meet the following criteria,

All persons or entities who, at any time from August 1, 2006 to the present (the “Class Period”), were members of a Homeowners’ Association or like entity and who were pursued for an alleged debt owed to that Homeowners’ Association or like entity by any of the Defendants or other Community Management Companies who purported to pursue collections against said persons or entities without proper legal representation and/or on behalf of their third party HOA/Condo customers and/or who improperly held themselves out to be an attorney.

  

Related information

Class Action Filed Against AZ HOA Management Companies (Attorney Roger Wood blog)

UPL 12-01 – Scope of Legal Services to HOA’s (March 2012) (State Bar Advisory Opinion)

Final Order: HOA management firm engaged in unauthorized practice of law(AAM, LLC  was the defendant.  Still not made public info on the Supreme Court or State Bar web pages.)