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Subject: legal counsel arrangements
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Author Messages
JayF1
(Washington)

Posts:52


02/12/2018 11:13 PM  
Hi everyone. I am wondering about legal counsel options. We have 4 phases for legal action for delinquent accounts. That looks straightforward but what about the other basic & simple legal questions. I am new to this, there are times it would be much easier to ask legal advice on what the board should engage or not. The consensus of the Board is not to over-regulate our governing docs but be selective on what matters the most to our community. Our CCRs are really very restrictive and written by a lawyer who probably never lived in HOA development. We are taking the approach like a police officer would do regarding all the law. He doesn't have to engage if it is not so serious. As long as we are consistently enforcing the selected regulations to all owners, we should be good to go.

What legal counsel arrangements are other HOAs doing? I understand major issues we can seek legal counsel if the cost justifies it. But what about little ones, more like neighbor vs neighbor issues that get the board engaged. I lean forward to having the neighbors resolve the issue by themselves and advice them if we Board does get engaged, we will enforce it to all owners. This is probably a different approach but honestly, strictly following our CCRs will make a lot of people unhappy especially street parking. I also wonder what lawyers are offering with your arrangments as well. Any advice would be greatly appreciated.
TimB4
(Virginia)

Posts:15889


02/13/2018 7:13 AM  
neighbor v neighbor issues are just that, NvN and not an Association issue.
We have a strict requirement that for the Association to become involved in what would be a NvN issue, two or more complaints have to submitted. Otherwise, the Association stays out of it.

Legal issues we rarely have. I think we asked a question once in the past 10 years.
keep in mind that you have to pay for those opinions. So wait until you really need them.

Collection actions:
30 days - 1st notice
60 days - 2nd notice
90 days - 3rd notice sent via certified mail
120 days - 4th notice and notice of agenda item to turn the issue over for collections
Unless the member has approached the Board, once the board decides we turn it over to the attorney and all further communications to the member is done via the attorney.
BillH10
(Texas)

Posts:227


02/13/2018 7:36 AM  
We have a similar, documented, collections timeline, as do most associations in this state as there are guidelines which must be followed or you have to restart the cycle. The attorneys we use will not even begin collections activities if there is no documented and filed association delinquent account collection policy in place.

I agree with Tim regarding neighbor-to-neighbor issues. The Board should do everything in its power to remain arms length. If owner A is doing something with which owner B takes issue and the Board or MC is contacted, we consistently advise our Boards to respond to the owners involved that the Association is not involved in the issue if it does not fall under the Governing Documents in some way. We also suggest an aggrieved owner suffering from noise from next door for example, contact the police or code compliance. Especially in single family home HOAs.

In the last two years our clients have had to consult with their attorneys regarding:

-Development, Filing, and Implementation of Payment and Collection Policies

-Development, Filing, and Implementation of Out of Compliance Policies with Notification Process, Timeline, Hearing, and Fine Amounts

-Responsibility for repairs to "inside the unit" condominium items such as drywall, paint, carpeting, and shelving when the Association found it necessary to access common elements behind the drywall which was damaged in the process

-Interpretations of Bylaws, Declarations, and Texas Property Code requirements

-Actual Delinquent Account Collection/Lien Filing (only an attorney can file a lien in Texas which encumbers real property)


JohnC46
(South Carolina)

Posts:7635


02/13/2018 7:49 AM  
Jay

We do not have our attorney on a retainer. We use him for Covenant changes. He also has a collections department as part of his practices so we do use that department all the time.

Our schedule is somewhat like Tim' but we bill and pay quarterly:

A. one qtr late: 1st notice as part of the bill.

B. two qtr late: 2nd notice as part of the bill and request to pay within 30 days or legal action.

C. 30 days later (now two quarters plus 30 days late): letter from attorney threatening lien and foreclosure. The HOA is charged $65 for this letter.

D. 60 days later (now 3 qtrs late): letter from attorney that a lien has been filed and foreclosure will commence. The cost to remove such will be legal fee of $300.00 plus owed dues which have also gathered some interest/late penalties.

Basically you can be about 7 months (two billing cycles) late before we start any action. We will soon be moving this up by eliminating above step B. This will mean one can be 4 months late before we start any action.

We have never and we do not see ever going to foreclosure.

We had one owner 3 years behind ($1,800.00 total) but their amount to make it all go away would have been over $4,000.00 what with interest, late penalties, legal fees, etc. They filed bankruptcy.

What you want to do is set up a procedure, publish it, and hold to it.

I once read that 5% to 7% is typical for non-collectible dues. Do not hold me to this number.



SheliaH
(Indiana)

Posts:2231


02/13/2018 12:09 PM  
We have an attorney on retainer - most of his job is in dealing with delinquencies, but part of our letter of engagement gives us a certain number of hours in which we can call or email with questions or basic legal research, so that does save us time and money. When I was on the board we also designated one person to contact the attorney as needed and would discuss and agree upon that contact during the meeting, so we could keep track of how much time we had left and ensure we weren't running to him with every little issue.

That will be the key to what you do - I find people don't sit down and think things all the way through before they run to the attorney with something that they could have figured out on their own if they'd just given themselves some time. One way to cut down on this is to read your documents - it's not about quoting every single line, but they should give you general ideas as to what the board can and should do.

For instance, our association never gets involved in disputes between neighbors unless it concerns use/misuse/abuse of the common area and/or several neighbors are involved. Some people aren't happy with that, but we refer them back to the documents - if they can find a section that specifically states the board should get involved, come back and see us with that section.

Another thing that might help you - check your documents to see if the board has the authority to establish additional rules and regulations as long as they don't contradict the Bylaws and CCRs. If so (and you probably have that authority), you can establish regulations and protocols for certain situations, such as parking (e.g. no unlicensed vehicles on the street). Don't worry about establishing a protocol for EVERY.SINGLE.SITUATION. you may encounter because life's too unpredictable and you'll need too many.

The board should also invest in some training regarding rule enforcement, conflict resolution and just dealing with hardheaded people (CAI has some great materials on these and related subjects). Learning how to cut through the BS and think of creative ways to resolve problems instead of racing to the attorney can be very effective in preventing stomach aches and the need for a few stiff drinks!
RichardP13
(California)

Posts:2902


02/13/2018 12:37 PM  
Jay,

You asked a question, "What legal counsel arrangements are other HOAs doing?"

When I got involved with my former HOA, we had a law firm bleeding us to death. W=Once we achieved a majority on the board, we terminated the services of the law firm and did most of our "legal work" inside. There is a good website, maintained by a law firm, that, in my opinion, is the best in the country. What our association got was "free" legal advise/opinions and so much more. That was our attorney, free of charge. We researched about a hundred HOA sites looking for viable collection and fine policies, making sure they all complied with California statues. We exhaustively researched election rules and came up with a rule book 30 pages long complete with all election forms and ethics code for candidate to sign prior to being included on the ballots.

The point is there is a lot of information about how HOA's are being run in your state. It does take some time and if you have an interest I would suggest dividing up different tasks to different board members of committees. It can only make you a better community.

Learn from others.
JayF1
(Washington)

Posts:52


02/13/2018 1:49 PM  
Just awesome response and wealth of information. It is nice to know what to expect and how to address them in this regard. I knew it can be very costly to seek legal advice and the lack of thereof. I just don't want us to get into a bind of something unforeseen and yet presume little an exposure. I will take your points to the heart and move forward. Notes are taken and I greatly appreciate your time & experience helping me out.
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