Tag: Arizona

Is your HOA manager engaging in the unauthorized practice of law?

State Bars take a strong stand against persons who are not lawyers or licensed paralegals providing advice, filing forms, or preparing documents that affect your legal rights.  That means, telling you what the law or governing documents say about why they can do what they are doing!  It happens every day, everywhere, in all states.  The regulation of the practice of law can be found in the statutes and Supreme Court rules of every state. They are complex and detailed, but my summary is correct.  (For Arizona see, Supreme Court Rules, VI. UNAUTHORIZED PRACTICE OF LAW, Rule 75 et seq.)

In 2004, the Arizona State Bar Advisory Opinion, UPL 04-02 – Property Management Companies, addressed 2 important issues that occur quite frequently in many HOAs.   They are:

 

1.     May a property management company prepare documents such as late payment notices, demand letters seeking payment of rent or association fees, and eviction notices relating to the property being managed? Yes, if the preparation of such documents is incidental to the regular course of the property management company’s business or if the documents are prepared by a certified document preparer.

 

2.     May a property management company prepare and record liens relating to the property being managed? Yes, if the preparation and recording of such liens is incidental to the regular course of the property management company’s business or if the liens are prepared and recorded by a certified document preparer.

 

The opinion clarifies  (1) above that,

However, preparation of documents such as eviction notices or late payment notices constitutes the practice of law . . . if they are intended to affect a property owner’s legal rights relative to a property owner’s tenant.

And therefore, the manager is engaging in the unauthorized practice of law (UPL) when a state law or governing document requires such an act.  Otherwise, the notice has no legal effect, according to the Opinion.

Also, these notices are not incidental to the HOA property manager’s  duties.

 

In regard to (2) above, filing of liens, the Opinion states,

[A] property management company’s preparation and recording of a lien constitutes the practice of law, because a lien is intended to affect either the property owner’s rights relative to a tenant or a homeowners’ associations’ rights relative to an individual homeowner. Additionally, because a lien is filed with the County Recorder, the preparation and recording of a lien is also the practice of law . . . .

Again, if not incidental and performed by a certified paralegal.

With respect to a 3rd question on representing the HOA before tribunals, the Opinion said no way.  Of course, it may supply information to the HOA.

 

The delegation, and many times absolute delegation, to HOA managers/compnies by the HOA board does not permit the manager to act as an attorney and  to violate the law.

If you are subject to any of the above UPL violations, file a complaint with your State Bar, giving the details and evidence, and stating the management company name, if any, and any CAI or other managers association membership.  Let’s get the facts out.  Only you can clean up this mess with HOAs!

 

Allegations filed against AZ HOA attorneys in sealed case

Of the 66 General Allegations in the court appointed Receiver suit against the HOA’s former attorney, CAI  and CCAL members  Maxwell and  Morgan, I have prepared a list of  13 allegations that I consider representative of the allegations.   On behalf of the  public and its constitutional right to know, they are listed because the court completely sealed the records in DC Lot Owners v. Maxwell & Morgan, CV 2010-004684, Pinal County Superior Court, AZ, so that an online  public inquiry results in a “not found.” 

I have not been notified by the court of any such order to close the records, nor was I permitted to see a copy of the order to seal the records.  Such failure to provide a notice and reason for closing court records violates the Arizona Supreme Court Rule 123(d): “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.”

Understand that an allegation is a claim of wrongdoing by a  party to be proven in court.  I am sure many readers will identify with similar activities by other attorneys that have occurred in their HOA.

To understand these allegations, some clarifications are in order:

  •          “Majority Owners” is a group of owners who took control of the HOA.
  •          “Braslawsce” refers to the underlying law suit that resulted in the appointment of the Receiver, who is bringing this suit against the HOA attorneys.

 

Read the selected allegations here.

 

See,  Arizona court protection of CAI member attorneys

Arizona court protection of CAI member attorneys

The Arizona case, DC Lot v. Maxwell & Morgan, against a CAI HOA attorney regarding some $650,000 in missing HOA funds is closed or sealed.  A court order is needed to unseal it. Even the court ordered closing and the reasons for its action are sealed. The public is being kept in the dark.  Why?  Now I can understand that maybe there are investigations or discoveries going on that certain parties shouldn’t know about, but this is a civil case, not criminal.

Remember, this is a case brought by the court appointed Receiver and not by just anybody else. The CAI attorney law firm of Maxwell & Morgan is being sued for aiding & abetting and disgorgement, among other things. Maxwell & Morgan are still practicing law. Maxwell has had a few sanctions against him. Why the secrecy?

The Arizona Capitol Times covered the underlying story in 2009, so there’s no secret anymore. The secret is the fact that a CAI member attorney is being sued for some serious wrongs. And if by some chance it is felt that open court records would diminish DC property values and that’s the justification for complete secrecy, something is rotten in Denmark and in Arizona.

Rule 123 of the Arizona Rules of the Supreme Court addresses the closing, “sealing,” of case records. R 123 allows the judge to seal it on his own, in the interest of the public, or upon motion of a party. What is the public interest being served here? Generally, the closing of a case, excluding the usual personal info like social security number, proprietary business data, etc., relates to juvenile and criminal proceedings.

R 123(c)(1) Open Records Policy. . . [T]he records in all courts . . . are presumed to be open to any member of the public . . . . However, in view of the countervailing interests of confidentiality, privacy or the best interests of the state public access to some court records may be restricted . . . . (My emphasis).

(d) Access to Case records. 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.

It appears Rule 123(d) has been violated as there is no public record of the seal order. R 123(d) can’t mean that the reasons for closing records are to be kept secret, too, can it? Now, that would require extreme level of public protection, maybe national security level, to “erase” all the records, don’t you think? The case just “disappeared like smoke in the wind,” to quote colleague, and only because I had obtained the case number way back when has this fact come to light! What could justify a complete blackout?

It has similarities to another CAI member (Carpenter Hazlewood) case in which the Maricopa County superior court judged failed to give reasons for denying my motion to intervene (required so I could appeal the denial) in the OAH statute constitutionality case (Phoenix Townhouse v. AZ DFBLS), which was decided by default. And then all my submissions to the court were ordered stricken and the clerk was ordered not to accept any further materials from me. That material contained evidence that the “real person in interest” no longer existed as he no longer owned a lot in the HOA in question. Yet the decision was allowed to stand.

I am seeking assistance from concerned parties to help unseal these records, which smells of HOA attorney protection, and denying the people their right to public disclosure.

References

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

AZ Supreme Court accepts advocate’s amicus brief in challenge to HOA statute

Amicus

Dare oppose the Will of the HOA, you will pay for it!

Local Phoenix Ch. 3, azfamily.com, (HOA forecloses on Mesa homeowner) did an excellent job in bringing out what goes on in HOA-Land where HOAs are protected by public policy.   In this incident, a homeowner builds a wall for security, as she stated, and gets fined by the HOA.  In a default judgment for an injunction, the CAI HOA attorney obtained some $16,000 in fees for less than 9 months’ work.  This incident expanded to the HOA foreclosure for nonpayment of assessments.

In the foreclosure, a simple filing asking the judge to grant the sale — unlike other disputes over nonpayment of a debt, there are no justifiable excuses not to pay HOA dues — the HOA attorneys tacked on another $12,000 in fees, for a total of some $28,000 in fees.  The HOA got a total just $3,300, of which $1,700 were for unpaid assessments.

If this was in the public arena, and a fine was permitted, there would be no attorney fees paid.  If the state foreclosed for nonpayment of taxes, the equivalent of HOA-Land assessments, there would be no attorney fees.  But, the HOA attorneys are allowed to walk away with fees far in excess of the fines and unpaid “taxes.”  I call it legalized extortion.  

The extortion consists in knowing the homeowner does not have the funds or power to oppose the HOA, and the HOA is not punished under law for any wrong doing.  So the HOA sues, knowing that it has an  80% of getting a default decision, or the homeowner pays the money demanded.   Any different from banana republic justice?    The problem becomes out of control when the homeowner falsely, but innocently, believes  the HOA can’t do anything to him. He lets it go until sued for the typical amounts as involved in this incident.

The common pro-HOA, but  misleading, argument on the acceptance to be bound to the CC&Rs has no merit.  It  ignores the questions of fraud and misrepresentation when buying an HOA controlled home.    For example, is the buyer told that the “sacred” CC&Rs at his closing can be modified without his consent, making them a meaningless piece of paper?  That this ability means that his neighbors control what he still thinks is his private property?    Is the  buyer told that his house is collateral to the HOA, and he must pay no matter, even if  the HOA fails to perform or violates the CC&Rs; or that the CC&Rs are a binding contract whether or not he has signed or read them?  And what about the agent who makes the buyer sign the purchase contract and initial all the contract pages, but requires nothing equivalent from the buyer regarding that second, briefly mentioned in passing, CC&Rs contract?   Look up the definition of fraud and misrepresentation.

In the above AZFamily.com story, when  the homeowner appealed   the attorney fees, the judge approved them writing that, “The Court notes in passing that the short answer to defendant’s objection to the amount of attorneys’ fees is that they were caused by defendant’s intransigence.”  (Minute entry of 3/5/2012, CV 20120-12322).

“Intransigence” is a loaded word!   It denotes firmness and sticking to your guns, even stubborness.  What the judge has done here is to punish the homeowner for standing up for her rights and her home against the banana republic justice illustrated above.  Dare oppose the Will of the HOA and you will pay for it!   Big time!  And he rewards the attorney, without any discussion of the role the attorney played in the delays.  What about the 3 minute entries over 2 years that basically said, “nothing is happening for the past 150 days with the suit”, about which the attorney could have prevented by seeking a decision.  But that would cut his fees, wouldn’t it?  The unreasonable prolonging of law suits violates  R11(a) of civil procedure.

Is this the public policy of the State of Arizona?   Support the HOA and its attorney against the people of Arizona who have been misled about HOA-Land?  Four bills that would have held the HOA and its board accountable under penalty, and which would have provided for “clean HOA elections,” failed to become law this past session.

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

In 2009, homeowners in DC Lot Owners Association obtained a court appointed Receiver to find out what happened to some $650,000 in missing HOA funds. CAI members, and CCAL members, Maxwell & Morgan were the HOA attorneys.  (See Arizona Capitol Times Oct. 7, 2009 article, Casa Grande HOA stripped of powers over accusations of theft and fraud).

In 2010, the Receiver then filed suit against Maxwell & Morgan and Charles Maxwell, personally — DC Lot Owners Assn v. Maxwell & Morgan, CV 2010-004684 — charging aiding & abetting, disgorgement, and breach of ethical duties among other charges.  As of this date, some 18 months after filing the complaint, the Pinal County, Arizona Superior Court shows no record of the case number, or of a complaint being filed naming DC Lot or Maxwell & Morgan as parties.  There is no record of a minute entry order to seal the court records, leaving the public totally ignorant of this important case involving HOA attorneys.

After some persistence, it was determined from a call to the Pinal County Clerk’s Office that the case was indeed sealed, no date given.  Why is the public being shut out?  Who ordered the sealing of the records?  The Judge?  Or was it pressure from the national HOA lobbying organization to squelch bad publicity about one of its self-declared, honored CCAL attorneys?  There is no legitimate reason for sealing the records of this case.  What happened to the $650,000?  Who is responsible for the loss?  The public has a right to know!

I am pursuing the matter seeking the help of media organizations to unseal the records.