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Subject: Can a BOD member be the HOA attorney too?
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MicheleB7
(Florida)

Posts:16


09/29/2020 10:11 AM  
Our HOA just had a recall and the new Treasurer who is one of the three directors is going to be the HOA's attorney. Is that legal or ethical? We are in Florida.
ChrisE8
(New York)

Posts:128


09/29/2020 10:27 AM  
Disinterested directors, or HOA members, should approve the HOA's engagement of the lawyer for legal services.

It raises ethical issues for the lawyer to do that, since the lawyer's judgment could be compromised by wanting to protect the person's own interests as a board member. So the lawyer ought to think twice before doing it.
AugustinD


Posts:4154


09/29/2020 10:34 AM  
Posted By MicheleB7 on 09/29/2020 10:11 AM
Our HOA just had a recall and the new Treasurer who is one of the three directors is going to be the HOA's attorney. Is that legal or ethical? We are in Florida.
Posted By MicheleB7 on 07/04/2020 6:59 AM
I’m the president of our 63 home HOA. We are gated community with private streets (2) and a fishing pier.
I presume this is a HOA subject to FS 720. This may or may not have a bearing on the discussion.

When there is a conflict between the HOA and this HOA member (who serves as a director and the HOA's attorney), then the HOA will be in the interesting position of having the attorney representing the HOA attacking himself. Of course the law, and in particular the attorney's rules of professional conduct, prohibits this. The Supreme Court of Florida enforces the Florida attorney's rules of professional conduct.

Let me not mince words: This jerk-attorney-director-treasurer-HOA_owner may rationalize that the HOA need only hire another attorney to deal with any problem he causes as a HOA member. This is incredibly expensive. Furthermore, if and when a conflict arises between this jerk, said jerk will be heavily restricted in how he can participate (1) as a director; and (2) as the HOA's attorney. In short, I believe he will not be able to competently represent the HOA as its attorney. I believe he will be obliged, under Florida's Rules of Professional Conduct for attorneys, to resign as the HOA's attorney. There's a chance he is already violating Florida's Rules of Professional Conduct for attorneys. See Rule 4-1.7 at https://www-media.floridabar.org/uploads/2020/09/2021_03-SEP-RRTFB-9-3-2020.pdf .

I suggest printing out all of Rule 4-1.7 and its accompanying commentary as a PDF file. Distribut this to the Board. Put Rule 4-1.7 on the agenda for the next Board meeting. Go through Rule 4-1.7 and its commentary, point by point, with the entire Board. If the jerk does not back off, throw his a-- out of the meeting on grounds of a conflict of interest, and continue to discuss this with the other directors in his (required, afaic) absence. As needed, and for fun and due diligence, get the opinion of // another // attorney about the prudence of hiring the jerk as the HOA's attorney.
MicheleB7
(Florida)

Posts:16


09/29/2020 10:51 AM  
The recall of two officers was done by deception. Owners were told they were signing a petition to a)have a member meeting or b) reduce HOA dues from $75 per month to $30 per month or c) hold an election of officers. Owners signed without reading and are now outraged but it is too late. The 5 day period is done, the former board did not validate the signatures and chose to resign on their own so there would be no arbitration/mediation costs to fight the petition. Effectively, the HOA as of last Thursday afternoon had no BOD or officers. The new BOD assumed they were the BOD because their names were on the recall petition to replace the two directors they wanted removed. The attorney for the HOA said the replacements are the new BOD and now he has been removed as attorney and presumably the new director will be the attorney for the HOA and its Treasurer. We feel the whole thing was illegal but the attorney and management company never had a situation like this and went along with it.
AugustinD


Posts:4154


09/29/2020 10:55 AM  
Michele, are you still a director on this 3-director Board? If so, here's how I see this playing out:

-- -- The Florida Not for Profit Corporation statute requires a majority vote for retaining said jerk. See the excerpt below.

-- The Florida Not for Profit Corporation statute requires the jerk-director-treasurer-wannabee_HOA_attorney-HOA_member to recuse himself from the vote on whether to retain said jerk as the HOA attorney. See excerpt below.

-- The remaining two directors vote.

-- You vote against retaining said jerk as the HOA's attorney.

-- With only two directors legally able to vote, a majority in favor of retaining said jerk is not possible.

-- Said jerk cannot be hired.

[start gloat]I think this is around $500 of legal advice you saved because you were smart enough to come here and ask experienced people about how to proceed. [/end gloat]


== Excerpt from Florida Not for Profit Corporation Act ===

(2) For purposes of paragraph (1)(a) only, a conflict-of-interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board of directors, or on the committee, who have no relationship or interest in the transaction described in subsection (1), but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors who have no relationship or interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director having a relationship or interest in the transaction does not affect the validity of any action taken under paragraph (1)(a) if the transaction is otherwise authorized, approved, or ratified as provided in subsection (1), but such presence or vote of such a director may be counted for purposes of determining whether the transaction is approved under other sections of this chapter.

See http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0617/0617.html
AugustinD


Posts:4154


09/29/2020 11:15 AM  
Posted By MicheleB7 on 09/29/2020 10:51 AM
The recall of two officers was done by deception.
Officers may not be recalled. Only directors may be recalled. If you do not know the difference, this is a huge problem.
Posted By MicheleB7 on 09/29/2020 10:51 AM
Owners were told they were signing a petition to a)have a member meeting or b) reduce HOA dues from $75 per month to $30 per month or c) hold an election of officers.
It sounds like the petition was legally defective in a few ways.
Posted By MicheleB7 on 09/29/2020 10:51 AM
Owners signed without reading and are now outraged but it is too late. The 5 day period is done, the former board did not validate the signatures and chose to resign on their own so there would be no arbitration/mediation costs to fight the petition.
For the record and regarding a petition for arbitration, the former board is referring to FS 720.303 (10) (d).
Posted By MicheleB7 on 09/29/2020 10:51 AM
Effectively, the HOA as of last Thursday afternoon had no BOD or officers. The new BOD assumed they were the BOD because their names were on the recall petition to replace the two directors they wanted removed.
Wrong. These folks are not the lawful directors of the HOA.
Posted By MicheleB7 on 09/29/2020 10:51 AM
The attorney for the HOA said the replacements are the new BOD[.] [N]ow he has been removed as attorney
Nope. It takes a lawfully elected board to remove him as attorney.

In my opinion your group's options are as follows:

-- follow FS 720.3053 (apply for receivership). This will be expensive and time intensive. I am betting there is not a single member at your HOA who understands FS 720.3053. I believe an attorney will be essential for your group to accomplish this. At least $20,000 and up for the costs of the attorney and the expense of a receiver.

-- Recall the self-appointed dictators through a proper recall proceeding. Again, I believe your group will need an attorney for this. Figure at least $10,000 of attorney fees.

-- Wait until the next election and replace the bums.

-- Hire an attorney to file a complaint with the Florida DBPR.

MicheleB7
(Florida)

Posts:16


09/29/2020 11:39 AM  
I was one of the recalled directors. The remaining director who also served as Treasurer resigned. We knew the petition was done on lies and deception but we did not want to cost the HOA fees for arbitration or receivership. The new directors installed themselves today and the budget meeting will be on Thursday. The woman who started all of this is is a personal property lawsuit with another director who lives next to her. We also have a conservation easement that runs across 6 riverfront home properties (her included) and the new director had a bobcat come in when she first moved in and had it clear her's and her neighbors' conservation easements. This brought the county DEP down on them and she has blamed me for reporting from day 1, sadly, it was the permit technician from our city who reported her. Its a big nightmare and I'm glad I'm no longer the president or a director. I do think there will be lawsuits against the HOA in the near future and I'll probably put my house up for sale before the property values go down.
JohnC46
(South Carolina)

Posts:10014


09/29/2020 12:01 PM  
Posted By MicheleB7 on 09/29/2020 11:39 AM
I was one of the recalled directors. The remaining director who also served as Treasurer resigned. We knew the petition was done on lies and deception but we did not want to cost the HOA fees for arbitration or receivership. The new directors installed themselves today and the budget meeting will be on Thursday. The woman who started all of this is is a personal property lawsuit with another director who lives next to her. We also have a conservation easement that runs across 6 riverfront home properties (her included) and the new director had a bobcat come in when she first moved in and had it clear her's and her neighbors' conservation easements. This brought the county DEP down on them and she has blamed me for reporting from day 1, sadly, it was the permit technician from our city who reported her. Its a big nightmare and I'm glad I'm no longer the president or a director. I do think there will be lawsuits against the HOA in the near future and I'll probably put my house up for sale before the property values go down.



A little bitter are we?
AugustinD


Posts:4154


09/29/2020 12:02 PM  
Posted By MicheleB7 on 09/29/2020 11:39 AM
I'll probably put my house up for sale before the property values go down.
I cannot say for sure if this is your best option. But it might be. From what I can tell so far, and if I were in your shoes, I would at least be seriously considering this option. Buena suerte.
AugustinD


Posts:4154


09/29/2020 12:04 PM  
Posted By JohnC46 on 09/29/2020 12:01 PM
Posted By MicheleB7 on 09/29/2020 11:39 AM
I was one of the recalled directors. The remaining director who also served as Treasurer resigned. We knew the petition was done on lies and deception but we did not want to cost the HOA fees for arbitration or receivership. The new directors installed themselves today and the budget meeting will be on Thursday. The woman who started all of this is is a personal property lawsuit with another director who lives next to her. We also have a conservation easement that runs across 6 riverfront home properties (her included) and the new director had a bobcat come in when she first moved in and had it clear her's and her neighbors' conservation easements. This brought the county DEP down on them and she has blamed me for reporting from day 1, sadly, it was the permit technician from our city who reported her. Its a big nightmare and I'm glad I'm no longer the president or a director. I do think there will be lawsuits against the HOA in the near future and I'll probably put my house up for sale before the property values go down.



A little bitter are we?
Oh come on. The sturm-und-drang at this HOA sounds pretty intense to me. Can you blame MicheleB7 for considering selling and moving?
ChrisE8
(New York)

Posts:128


09/29/2020 12:13 PM  
I would also move. Particularly now, when being a seller is so easy.
GenoS
(Florida)

Posts:4130


09/29/2020 12:28 PM  
Posted By AugustinD on 09/29/2020 10:34 AM
Let me not mince words: This jerk-attorney-director-treasurer-HOA_owner may rationalize that the HOA need only hire another attorney to deal with any problem he causes as a HOA member. This is incredibly expensive. Furthermore, if and when a conflict arises between this jerk, said jerk will be heavily restricted in how he can participate (1) as a director; and (2) as the HOA's attorney. In short, I believe he will not be able to competently represent the HOA as its attorney. I believe he will be obliged, under Florida's Rules of Professional Conduct for attorneys, to resign as the HOA's attorney. There's a chance he is already violating Florida's Rules of Professional Conduct for attorneys. See Rule 4-1.7 at https://www-media.floridabar.org/uploads/2020/09/2021_03-SEP-RRTFB-9-3-2020.pdf .

The old saying is something else but I really think "has a fool for a client" applies here in some way.
AugustinD


Posts:4154


09/29/2020 12:34 PM  
An attorney that serves as a director on his client's board has a fool for a client. The Board that retains one of its directors as its attorney has a fool for an attorney.
JohnC46
(South Carolina)

Posts:10014


09/29/2020 12:37 PM  
Posted By AugustinD on 09/29/2020 12:34 PM
An attorney that serves as a director on his client's board has a fool for a client. The Board that retains one of its directors as its attorney has a fool for an attorney.




I agree.
ChrisE8
(New York)

Posts:128


09/29/2020 1:06 PM  
I think that having a lawyer on the HOA's board can be helpful, given stories that I hear about HOA boards (unprofessional behavior and lack of knowledge about how boards and legal documents work). But the lawyer should be really careful to stay away from any ethical pitfalls. And the board should be really careful not to let a director-lawyer vote in a way that benefits the director-lawyer.
AugustinD


Posts:4154


09/29/2020 1:12 PM  
Posted By ChrisE8 on 09/29/2020 1:06 PM
I think that having a lawyer on the HOA's board can be helpful
I have no problem with this. I think a plumber serving on a HOA board can be even more helpful. (Maybe not a Dick Nixon type of plumber.) And no one should mix one's personal business with serving on a board.
JohnC46
(South Carolina)

Posts:10014


09/29/2020 2:32 PM  
I served on an association's BOD where one member was an attorney. As far as I am concerned, he did more harm than good. He was always saying well maybe we should get a legal opinion (billable) on this from our attorney. Like chumming for business for his profession.

The other PIA members were school teachers. They were not use to making decisions and wanted to treat our owners like school children. Like punish all for the action of one.

Real estate agents can be helpful until they try and "play lawyer".

Give me sales and marketing people who can sell stuff. Give me financial people/CPA's who can show how to "manage" the books and explain finances. Give me "construction" people who understand the physical layout/plant and how things should be done. Give me someone who prides themself on their neighborhood and wants to maintain/better it.

Enough. I need a drink.
AugustinD


Posts:4154


09/29/2020 2:37 PM  
Posted By JohnC46 on 09/29/2020 2:32 PM
I served on an association's BOD where one member was an attorney. As far as I am concerned, he did more harm than good. He was always saying well maybe we should get a legal opinion (billable) on this from our attorney. Like chumming for business for his profession.
Oh god attorneys are so inbred. I remember a certain law professor holding forth at a patio cocktail gathering. With a big stupid grin, he reported that he routinely advised his lawyer-to-be students not to turn on their brethren attorneys.
GenoS
(Florida)

Posts:4130


09/29/2020 3:14 PM  
Posted By AugustinD on 09/29/2020 11:15 AM
It sounds like the petition was legally defective in a few ways.

It depends on how the petition was worded. Did everyone sign the same thing?

DBPR Arbitration Case 2004-02-6526 says,

"Unit owners are presumed as be ing capable of making decisions regarding association affairs and if these unit owners did not understand the purpose of the recall ballots that were presented to them, they could have requested additional information or declined to execute the ballot."

Apparently it's not unheard of for people to claim they didn't know or were confused about what they were signing. Such claims are routinely dismissed in Florida DBPR arbitration cases. It doesn't matter whether someone was actually confused or they're just saying that.
MicheleB7
(Florida)

Posts:16


09/29/2020 3:27 PM  
All owners signed the same petition and some signers weren't owners.
MicheleB7
(Florida)

Posts:16


09/29/2020 3:31 PM  
Not bitter, I had no intention of running again in 2022. My concern is how deceptive the new members are and mind you the new president has represented herself as a bod member when she wasn't and has cost the HOA thousands in attorney fees in the past.
GenoS
(Florida)

Posts:4130


09/29/2020 3:44 PM  
Posted By MicheleB7 on 09/29/2020 3:27 PM
All owners signed the same petition and some signers weren't owners.

Those should have been rejected. Would it have affected the outcome of the recall? If not, an arbitrator probably wouldn't consider their inclusion material. But if it was close, then there could be a problem. But if they already resigned rather than certify the recall, then they're gone and that question is moot. As long as they resigned in writing as required by the Florida Statutes.
AugustinD


Posts:4154


09/29/2020 5:40 PM  
Posted By GenoS on 09/29/2020 3:14 PM

Apparently it's not unheard of for people to claim they didn't know or were confused about what they were signing.
This is not what got my attention. Below is what got my attention:
Posted By MicheleB7 on 09/29/2020 10:51 AM
Owners were told they were signing a petition to a)have a member meeting or b) reduce HOA dues from $75 per month to $30 per month or c) hold an election of officers.
The petition should have been clear at the top as to what people were signing. It sounds like it was not at all clear.
GenoS
(Florida)

Posts:4130


09/29/2020 6:26 PM  
True 'dat. What was written at the top of the petition would be very important. Much more so than what people were "told". What people were told, orally, is almost certainly a he-said, she-said thing.

The real point I was making is that (in Florida) it's on the homeowners to make sure they understand exactly what it is that they're signing. Feeble excuses later on won't hold any water.
AugustinD


Posts:4154


09/29/2020 6:38 PM  
Posted By GenoS on 09/29/2020 6:26 PM
True 'dat. What was written at the top of the petition would be very important. Much more so than what people were "told". What people were told, orally, is almost certainly a he-said, she-said thing.

The real point I was making is that (in Florida) it's on the homeowners to make sure they understand exactly what it is that they're signing. Feeble excuses later on won't hold any water.
I agree. Also you're right that MicheleB7 was complaining about people supposedly just doing what they were told, instead of reading the petition. The blame for this belongs to the signers, not those who went around gathering signatures.
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