What is the purpose and function of the HOA attorney? Every association hires various vendors to help effectively run the association and assist the board in keeping the association out of trouble and as far away from potential liability as possible. Second to the association’s property manager, the association’s attorney is one of the most important vendors for any association. Before choosing an attorney, the board should interview multiple candidates and choose an attorney who will best serve the needs of the association. However an attorney is hired, the key is to know when to rely on or to request counsel from the association’s attorney.
One of the common misconceptions of owners within an association is the belief that the association’s attorney works directly for any single owner, any single board member or even the board of directors. This is simply not true. An association’s attorney works for the association as a whole. If the association is a corporation, the attorney works for the corporate entity. Owners or individual board members who believe that they have the right to demand answers from the association’s attorney or otherwise direct the attorney’s actions are mistaken. While the attorney works for the corporation or association as a whole, the association’s attorney is directed by the board of directors and can only take action as authorized by the board of directors collectively.
A simple way to explain this relationship is by comparing an HOA to a public corporation. In a public corporation the owners of the corporation would be the shareholders. In a corporate association, the shareholders would be the members of the association. Even if you own shares of stock in a public corporation, you cannot call the corporation’s attorney and request answers or demand that he or she take action at your direction. The same is true in an association. The attorney does not work for the individual “shareholders” or members.
The association’s attorney is chosen and hired by the board of directors. Many of the same characteristics that define a good manager will also define a good attorney. Because the association’s attorney does not handle issues for the association on a daily basis, however, some of the characteristics are different. Generally speaking, a board will want an attorney who is responsive, intelligent, well versed in the field, accessible (to the manager or designated board member), and pleasant to deal with. The board will want to ensure that the attorney will work hard to protect the association’s interests and will not permit members or other entities with whom the association deals to take advantage of the association.
The association’s attorney should also be familiar with alternative methods of resolving problems faced by the association. Litigation is not always the first or best answer. A good attorney will know that there are certain battles that are worth fighting and others that are best resolved at the outset, even if that means backing down from the “principal of the matter.” Huge amounts of money have been wasted by owners and associations merely as a result of trying to prove a point or advancing what they believe to be the “right principal.”
As an example, let us assume that the association faces a situation where an owner builds a small patio cover on his or her residence without first obtaining approval from the association. The actions clearly violate the association’s governing documents and the board has the authority to pursue the owner. The owner believed he or she was correct and now does not have sufficient funds to remove the cover. While the association might ultimately prevail in litigation to force the owner to remove the cover and possibly recover its attorney’s fees, this end result may be years off and potentially hundreds of thousands of dollars later. If the owner does not currently have the funds necessary to remove the cover, it is likely that the owner does not have sufficient funds to reimburse the association for money it may spend obtaining a judgment against the owner.
Now let us assume that it will cost approximately $1,000.00 to remove the cover. A good attorney may suggest alternative methods of resolving the matter. For example, the attorney may counsel the board to offer to split the cost of removing the patio cover. If the owner accepts, the board has obtained what it desired for $500.00, with no risk of not collecting attorney’s fees at a later date. Further, this course of action will likely prevent the risk of not winning in litigation or the hard feelings that generally result from litigation.
There are a variety of different methods for resolving this example. A good attorney will be able to discuss the situation with the board and the owner and provide many alternative courses of action for the board to consider. Ultimately the board must decide how it wishes to proceed. With an explanation of several various options, however, the board will be better able to serve its owners and protect the association’s assets while making a truly informed decision.
For these reasons, the board will want to hire an attorney who understands HOA law and who will advise the board and advocate for the association (for example, an attorney certified as a CCAL by CAI). As an advisor, the attorney can inform the board of the various possible outcomes of different courses of action. The association’s attorney may also review and/or draft contracts and will often negotiate on behalf of the association. When dealing with outside companies, the attorney will act as the association’s advocate, protecting the association’s interests and ensuring that the association obtains the best deal possible in any given situation.
Prevention or Cure?
One thing for a board to remember is the old adage that an ounce of prevention is often worth more than a pound of cure. In California a board of directors may be protected from personal liability by relying on the opinions of its experts. If a situation is facing the board which may result in future liability (large, lengthy or contentious contracts, for example), the board would better serve the association by requesting that the association’s attorney review the contract and/or negotiate on behalf of the association at the outset. The money spent at the beginning of a matter will be small when compared with how much an association may spend to attempt to solve a problem at a later date and/or attempt to terminate a contract which did not provide protections for the association at the outset. The ounce of prevention at the beginning of any given situation is worth saving many headaches and dollars in the future.
Another thing for owners and board members to remember is that while the attorney works for the association as a whole, the attorney-client “privilege” flows between the attorney and the board of directors. The board as a whole holds this privilege and may waive it and/or protect it as necessary. There is no privilege between the association’s attorney and any other single owner.
The reason for this privilege is to protect the association. If we assume that the privilege did not exist and that owners were privy to any correspondence or communication between the association and its attorney, the association’s strengths and weaknesses would be open for all owners to review. Owners who have issues with the association would be able to review correspondence from the association’s attorney to the board and know the board’s intended course of action in litigation or to know any weaknesses in the association’s case. This would enable the owner to review this information with his or her own attorney and prepare any response and/or counter action. Imagine playing chess while knowing all of your opponent’s moves ahead of time.
The association’s attorney should also be available to assist the association in collection of unpaid and/or delinquent association assessments. Because the laws concerning collection of assessments are fairly complex, the board of any association should ask its attorney regarding the appropriate course of action in any given situation and should be able to rely on the advice provided.
The board should also be able to rely on the association’s attorney for analysis and interpretation of the association’s governing documents. For example, the association’s attorney should be able to inform the board whether termite treatment in any particular area of the association is the responsibility of the association or a single owner. While there are certain circumstances where a definitive answer may not be possible, the association’s attorney should be able to provide the association with the best possible argument and most defensible course of action. Here again an ounce of prevention will protect the association in the long run. Requesting an analysis of the association’s governing documents prior to taking action will prevent embarrassing situations in the future and will enable the board to know it is taking an appropriate course of action.
What do you find most important in an HOA attorney?