Tag: Arizona

As word of manager UPL conduct spreads, where were the HOA attorneys?

Adrian Adams, a California CAI member attorney has spread the word about HOA manager  UPL activities.  And the word will continue to be spread to all states since they all has UPL rules. This blog entry follows just a week after my Commentary, Final Order: HOA management firm engaged in unauthorized practice of law, was published.

In the June 24, 2012 of the Davis-Stirling.com eNewsletter, “Managers Practicing Law.”  Adams offers the following advice to HOA boards,

Directors will have difficulty convincing a jury that seeking legal advice from a manager was prudent. . . . When asked for legal advice, a manager should always recommend that the board seek legal counsel. Doing so protects both the manager and the board.

Let’s step outside the box!    UPL supreme court rules have been around for many, many years in all states.  During all this time, where were and what were the CAI self-proclaimed HOA legal experts doing?   Did these experts not know about state supreme court rules on UPL?  Well, that’s no excuse, if true. 

If homeowners can be held accountable under CC&Rs that need only be recorded at the county clerk’s office, sight unseen and without an explicit buyer signature, why should these attorneys escape accountability for negligence to their HOA clients? 

CAI is the national lobbying entity, whose members have repeatedly gone before state legislatures to propose statutes governing HOAs on behalf of all the HOAs and homeowners. (CAI has a miniscule number of homeowners as members, at most 30,000 of some 25,000,000 HOA families).  And CAI attorneys often take the word of the HOA manager with respect to the validity of legal action, without the independent review required by civil court rules that the action is based on facts and the law (Rule 11(a), Signing of Pleadings).

The CAI attorney silence is disgraceful and violates the rules of civil procedure and professional code of conduct. Ethical rule 3.1, Organization as Client, of the code of professional conduct, specifically relates to the attorney’s awareness of illegal conduct by the client or “other person associated with the organization,” and 2.1, Advisor, whereby candid advice on moral and ethical issues may be rendered to the client.

I wonder what the reaction is from those 9 states that use CAI to license managers: Alaska, California, Connecticut, District of Columbia, Florida, Georgia, Illinois, Nevada, and Virginia.  Or from those towns, like in Arizona, who sponsor CAI seminars on good governance.

This egregious conduct is another solid example of the true nature of CAI’s involvement in the HOA governance industry.  It is unquestionably in the self-interest of its members, both its attorney and its management firm members. 

Final Order: HOA management firm engaged in unauthorized practice of law

Every state has rules regarding the unauthorized practice of law governing what activities constitute acting like a lawyer.  The certified Legal Document Preparer Board of the Arizona Supreme Court found AAM, LLC, both a CAI and Arizona Association of Community Managers (AACM) member, had engaged in such activities, which are commonly found in many other HOAs and with many other management firms/managers. (In Arizona, it’s Supreme Court Rule 31). 

In regard to AAM, many of the State Bar’s Hearing Officer  findings were dismissed and overturned in the Board’s May 24, 2012 Findings of Fact and Conclusions of Law (LDP-NFC –09-L094 and LDP-NFC-10-L026,   not to be found on the State Bar or Supreme Court websites).  The Board found AAM had exceeded its authority as a certified document preparer and violated Rule 31 in that, among other things,

  1. represented the HOA in violation of Rule 31, including signing and submitting lien documents as such were not incidental to its regular business activities;
  2. submitted documents that it had prepared to third-parties, such as collection letters, and filing court motions and complaints;
  3. represented HOAs in small claims court;
  4. although there existed a contract between AAM and the HOA to act as a representative of the HOA, such a contractual arrangement is subject to Rule 31, which cannot be overridden by private agreements;
  5. offered legal advice when it gave, through newsletter statements, made statements about “possible  legal rights, remedies, defenses, options or strategies;”
  6. through its offers to “coordinate payment plans” debt payment plans, AAM was not giving general information but was offering to negotiate with the HOA on behalf of the homeowner;
  7. “offered to negotiate homeowners” legal rights, remedies, defenses, options or strategies;”

 

It is interesting to note that former Arizona Supreme Court Chief Justice Zlaket was called as a witness by AAM.  He stated that “the purpose of the certified legal document preparer rules as protection of the public from charlatans who didn’t know what they were doing, from document prepares who were harming customers by preparing the wrong documents.”

 

 The full, detailed, 55 page Board document can be found at Legal Document

The sounds of silence: failing to publish legal opinion on illegal acts by HOA managers

If the guardians,  those disciplinary and oversight entities  protecting the integrity of the Arizona Supreme Court, which itself is the guardian of the integrity of the State of Arizona, fail in their duties and responsibilities under the Arizona Rules of the Supreme Court, what becomes of us?

Many of you are familiar with the old teaser, “If a tree falls in the middle of the woods, and there’s no one around, does it make a sound?”   Then, if a CAI member firm— an HOA attorney or manager — violates the law and the public is not noticed, did they really violate the law?  And, if there are events leading to the conclusion of abuse and a gross defect in the HOA legal concept, and the media fails to report them to the public, are there really serious defects in the HOA legal scheme? 

Readers of these Commentaries are aware of the serious charges made against a CAI member attorney in DC Lot Owners v. Maxwell & Morgan.  An awareness brought to the public’s attention not by public disclosure, as the records have been sealed by court order, but by a few individuals. 

Readers are now being made aware of the recent State Bar UPL Opinion, 12-01, issued in March 2012, relating to the legal acts that may be performed by HOA managers.  (This supersedes the 2004 UPL opinions previously reported here, and directly applies to HOA managers.  The opinion is based on an interpretation of Rule 31, Regulation of the Practice of Law, of the AZ Supreme Court Rules.)   

I am told that the UPL opinion is available, but not on the State Bar’s web page for UPL opinions, or on any State Bar web page.  Yet, its UPL opinion web page proudly declares,

The State Bar’s UPL (unauthorized practice of law) Advisory Committee now provides attorneys and consumers with non-binding written advisory opinions. The opinions interpret the UPL Supreme Court Rules and the Certified Legal Document Preparer Code.

These are the sounds of silence in HOA-Land.  These are the acts and omissions by the members of that unspoken alliance of No Negatives About HOAs.  These revelations are not the result of public disclosure, but by the efforts of a few individuals.   And these few individuals do not include members of the media.  

One can only conclude that the State Bar also has a public policy of protecting HOAs, and their attorneys and managers.

Judicial misconduct complaint filed for sealing records in AZ case against HOA attorney

A complaint was filed against a Pinal County, AZ judge for the sealing of records in this civil case in violation of the Arizona Rules of the Supreme Court, Rule 123(d) that requires a statement to be made giving the reasons for the sealing of case records.  The case involved charges of aiding and abetting and disgorgement, among others, filed by a court appointed Receiver looking for some missing $650,000 in HOA funds. The charges were against a well-known CAI member attorney.

There is no record of this case on the Pinal County Superior Court official public website, not even an entry that the case was sealed, and not even an entry that the case was dismissed.   This very disturbing act recalls the secret proceedings of Star Chamber justice with its own version of doing justice.  A motion asking the judge to unseal the records was denied by the county clerk, leading to this complaint of judicial misconduct.

The complaint of judicial misconduct was two-fold:  a black-letter violation of law in regard to Rule 123(d), which simple states, “Upon closing any record the court shall state the reason for the action, including a reference to the statute, case, rule or administrative order relied upon;”   and a complaint that the entire record of this case has been denied public access.

The judicial complaint set forth grounds for unsealing the records.

On behalf of the American public, and in light of the public’s strong interest in the judicial treatment of homeowner association attorneys and the longstanding public policy in favor of open access to judicial records, the undersigned, George K. Staropoli, hereby moves the Court to unseal all court records in this case.

 Staropoli has operated two nonprofit internet websites to provide nationwide information, news, legal actions, and commentary on events, incidents and developments pertaining to homeowners associations for over twelve years.  They are a blog, HOA Constitutional Government, and an informational site, Citizens for Constitutional Local Government, in support of homeowner rights and in opposition to the inequities of the existing HOA legal scheme. Staropoli has been acknowledged in several legal texts and treatises, and quoted in other books and in the news media.

And in further support of public access,

Rule 123(c), Public Access to the Judicial Records of the State of Arizona, of the Arizona Rules of the Supreme Court pertaining to Judicial Conduct, states that all court records are presumed to be open to the public, except “some court records” for confidentiality, privacy or if in the best interests of the state.  Rule 123(d) requires the court to show cause for sealing “some court records,” including the legal basis for such action.

The Arizona Rules of Judicial Conduct, Rule 81, emphasizes that “an independent, fair, and impartial judiciary is indispensable to our system of justice” and that the judiciary is to preserve the “principles of justice and the rule of law.”  Judges “should aspire at all times to conduct that ensures the greatest possible public confidence.”  It is inconceivable as to what state interests exist that would overwhelmingly override these precepts, and not to inform the public accordingly.

It was then argued that the attorney, Charles Maxwell, comes with unclean hands having been subject to serious sanctions regarding “fraud upon the court” and filing a frivolous suit.  And it was also argued that Maxwell is a public persona as a result of providing seminars and classes in the law to the public regarding HOAs, and as a highly respected member of CAI and its College of Community Association Lawyers. 

Speaking in judicial lingo, the heavy burden falls to the party seeking to hide the records to overcome all of the above.

The Arizona Commission on Judicial Conduct will conduct an investigation of the complaint, No. 12-148, in due order.

For more reading, see,

1.  Allegations filed against AZ HOA attorneys in sealed case

2.  What happened to the AZ lawsuit against HOA attorney for aiding & abetting missing $650,000?

HOA Privatization Scale: facing reality

Note:  As you read this commentary, please keep in mind the serious revelations of wrong-doing in HOA-Land: in Nevada, in California with corrupt judges, in Arizona where the case files on charges against an HOA attorney for aiding and abetting have been sealed, and in those states with consumer “pacifier” ombudsmen who accomplish very little.   Many will blame the government, and ignore the role played by the HOA member in allowing such activities to happen with such ease.  The Privatization Scale shows an attitude that can be described as an irrational fear of, “Don’t make waves otherwise the government will take my HOA away.”

 HOA Privatization Scale

  Having spent a few years in this arena of homeowner associations, I’ve come up with a scale to help define where a person stands on the status and acceptance of HOAs.  This is based on the attitudes and statements made by the person and will be helpful in understanding and communicating with him.

I chose a scale based on the degree of privatization that is acceptable to the HOA member; that is, how strongly does the person identify and accept the level of privatization in one’s life and home and the intrusion into one’s privacy by HOA boards. There are 5 classifications:

 1.      REVOLUTIONARY – This person sees HOAs as an anomaly to the American way of life and beliefs, and operating outside the laws of the land.  The HOA model must be completely revised or removed.

 2.      REFORMER— This person generally accepts the HOA legal model and powers of the HOA as granted by the CC&Rs, and permitted by the state governments. He only wants the board to change its ways to conform to his views.  He’s primarily concerned about his own local problem.

 3.      COMPLACENT — He is the person who is content with his HOA, only seeing “personal” aspects of the HOA’s powers and functions; that is, the HOA keeps the community neat and clean, provides amenities, etc. This person does not understand the broader issues surrounding HOAs.  There are no problems with the board, just those homeowners who don’t comply.  The board does a good job.

 4.      TEAM PLAYER — This person understands the private nature of the HOA, but prefers it and the sanctions against members.  He primarily is concerned about the quality and value of his community.  A believer in private clubs and their restrictions, and a person’s right to associate with whom he pleases. He does not let violations of fundamental principles and laws affect him.

5.      TRUE BELIEVER — This person is a power player who understands that the HOA private organization structure, with the lack of government enforcement against HOA board violators, offers an opportunity to control and to dominate. Enforcement is necessary to protect property values. What’s good for him is good for the community. Most horror stories can be found here.

 The graph shows a normal distribution curve and the percentages of the people within each segment.  As can be seen, I have shifted the Complacent category to the left. It signifies a preference by HOA members in favor of acceptance of the HOA legal concept, beyond an unbiased expectation.  That is, all things being equal, as I’ve tried to accomplish with the scale, category 3 should fall in the center of the graph.

 In the normal course of things, those at the extremes, the Revolutionaries and True Believers, are the most proactive and vocal segments, but not in equal strengths of being active.  The right-side has been more vocal and influential.

 From my many years of direct involvement in the HOA reform movement and my research and study into social and political reform movements, the environment and conditions necessary for substantive reforms to occur are not even on the horizon.  Token reforms will occur here and here, and some have brought substantive changes like the OAH adjudication of HOA disputes in Arizona, and the prohibition on foreclosing just for HOA fines.  Sadly, though, many substantive reform bills have been repeatedly rejected by state legislatures.

 As long as reformer-advocates continue to accept the legitimacy of the HOA legal scheme — not wrongful or unlawful — they have rejected their most powerful weapon in their battle to achieve substantive reforms.  And in doing so, they have allowed their very powerful oppressors to sit as equals at the bargaining table.  The outcome is, and can only be, as expected and as demonstrated historically. 

  

ASSERT YOUR RIGHTS AS A CITIZEN

REJECT THE HOA CONSTITUTION

 Send the HOA Member Declaration of Citizenship to your legislators!