Tag: unauthorized practice of law

SB 1454: Machiavelli at work in the AZ legislature – Part 2

Part 2 – UPL violations and “HOAS” in the title.

(See Part 1).

E.         Sanctions against HOA managers violating UPL

In spite of several emails sent to Rep. Ugenti, the Senate GE members, and the public in general there was no mention in the public hearings about the actions taken by the Arizona Supreme Court document preparer board in 2012 regarding the unauthorized practice of law, Supreme Court Rule 31). (See Arizona’s HB 2371 empowers unlicensed HOA property managers to avoid UPL).  I refer to the State Bar UPL Advisory Opinion, 12-01 and the decision holding AAM, a AACM and CAI member, to have repeatedly violated UPL.  (Supreme Court Board of Legal Document Preparers v. AAM, LDP-NFC-09-L094 and LDP-NFC-10-L026). Rather than seek remedial legislation SB1454 and HB 2371 sought to exempt HOA managers from UPL.

The illusion and appearance that all is well and that no stakeholder or legislator was aware of these actions was successful. 

 

F.         Arizona Capitol Times showing “HOAS” in SB 1454 short title

Finally, the weekly Arizona Capitol Times (ACT) covers goings on at the capitol and produces an online LOLA Report listing the short and long titles of all the bills. Its LOLA shows “HOAS” in the short tile of SB 1454. It states that the info is taken “from Arizona Capitol Reports reporters and records and from state and other databases. Bill-tracking information is updated continuously during legislative sessions.”   But, the official ALIS public access to legislative bill information does not show a short title with “HOAS.”   Who, when, and how was “HOAS” removed from the short title?  And why was it removed?  Surely ACT had no motive to change ALIS to add “HOAS”, and would not dare to do so.

Curiously, the AACM website under Legislative Update shows the same short title as from LOLA, as AACM states that’s where it got the info.  Why wasn’t this called to Ugenti’s attention, or did nobody notice?  Yet, there’s an addendum tacked on to the title, in all caps, “AS SIGNED BY GOVERNOR,” which could only come on June 20th or later with still no correction to reflect the official ALIS version.  Why not?

It has come to my attention that Jeff Sandquist, AACM lobbyist, explained that the state’s position for settling the constitutionality lawsuit was because it wanted to save portions of the bill that it thought was more important.  He seems to be aware that if the court declared the entire bill unconstitutional the initial SB 1454 provisions dealing with Elections would also be invalidated. However, by leaving off “HOAS” in the title the State could argue, if indeed the “plot” was discovered, as it was, that only the second part of Section 13 of the Constitution applied. This would only invalidate the HOA provisions. And so it happened. 

Was this the plan for removing “HOAS”?  Was this the plan for getting Senator Yee’s approval for attaching HB 2371 to her bill, SB 1454?  That her original bill would survive? Recall that Rep. Olson apparently didn’t approve of the Griffin attempt to add HB 2371 to his bill, HB 2518, and it died.

So I argue SB1454 was rushed through in the final hours of the night on the last day of the session, in the midst of attention focused on the budget and Medicare issues. The session ended just before 1:00 AM on the 14th.

“The founders understood that the principal mission of government was to secure people in their natural rights — to protect them against the lawless private thugs as well as of ill-intentioned legislators.” (“Machiavelli and America,” Hadley Arkes, p. 145, The Prince (Yale University Press, 1999)).

The arguments and events presented here make a case for a frustrated Rep. Ugenti who, in an act of desperation, intentionally violated the Arizona Constitution and House Rule 16(D).  The Legislature cannot sit idly by and allow a flagrant violation of the Arizona Constitution to go unpunished. It must send a message that such ardent belief in a bill does not allow for the law to be broken and that the end does not justify the means. 

I have urged the Arizona Speaker of the House and House Ethics Committee to bring disciplinary charges against Rep. Ugenti and to seek her expulsion under House Rule 1. Many questions remain unanswered.

Arizona’s HB 2371 empowers unlicensed HOA property managers to avoid UPL

In short, HB 2371 would allow untrained and unlicensed HOA property managers to represent HOAs in small claims court, but does not allow the homeowner to be represented.  Yet, real estate agents, who are required to take continuing education courses in agency, real estate, and contracts law, are not allowed to represent others in court.  And even licensed paralegals cannot represent others! Why allow untrained and unlicensed HOA managers to represent a special class of nonprofit entities?  What legitimate reason is there for this provision except to provide income for the special interests?

The only justification for this bill, which was by offered by the Sponsor, was that it was not controversial and it was agreed to at a meeting of all the stakeholders. However, the stakeholders did not include any homeowner advocacy group, and this bill is very much not only controversial but un-American as well.  This is the second such bill brought by a state representative in the past 3 years, the other being HB 2441, the “minority control” bill in 2011, that was rightfully defeated in the Senate.

In January of last year HOA managers were put on notice by the AZ Supreme Court opinion (UPL Advisory Opinion, 12-01) on the Unauthorized Practice of Law, and one firm in particular, a member of two HOA special interest trade organizations, was found to have engaged in the unauthorized practice of law (in RE: Board of Legal Document Preparers v. AAM, LDP-NFC-09-L094 and LDP-NFC-10-L026). 

So, it appears, the problem of managers engaging in UPL activities is to be resolved by introducing a bill to “make it all good without any requirement for training and licensing!  This is a disgraceful bill! A bill that treats the good people of Arizona, who are subject to unregulated HOA private governments, as second-class citizens.  It insults the good people of Arizona!

Furthermore, HB 2371 goes on to allow “contractors” (that can not only be managers, but landscapers, pool maintenance people, etc.) of HOAs to represent HOAs before the Office of Administrative Hearings. It allows attorney fees to be awarded only for the Petitioner if he wins. Under the law, OAH is not permitted to award attorney fees, so this bill is needed to make it happen.

 But, it is only for HOA adjudication hearings and not for any other agency hearing!  With HB 2371, the unlicensed and untrained manager will get fees paid by the Pro Se homeowner who turns to OAH because of no attorney fees.   Records show that some 90% of the homeowners were Pro Se not using an attorney, while the HOAs were almost 90% represented by an unnecessary attorney. (Based on detailed OAH records for the first 66 cases in 2006-7).

 The purpose of OAH adjudication was to provide an increased level of judicial protections for homeowners in HOAs without the need for an attorney in an informal setting, and without the need to understand the rules of court.  The HOA attorneys have been trying for years to turn OAH into civil court proceedings under 100 rules found in some 200 pages of legalese. But, the bill does not require that the HOA manager learn and understand the civil rules or the law.  

Once more the citizen, the whole reason for the existence of a democratic system of government, is smashed down to the bottom of the food chain by an unconscionable bill.  A disgraceful and insulting bill!  The Senate committee cannot allow this bill to pass in good conscience.  It must be soundly thrashed.

HB 2371 will be heard in the Arizona Senate Government & Environment Committee on a Monday to be determined.

Observations on AZ legislative treatment of HOA reform bills

If you listen carefully to the HB 2371 sponsor and committee chair explain her bill you would hear the familiar attitude taken by many legislators. First, you were told that a “meeting of all the stakeholders” to work on combining all the bills into one took place.  Oh yeah?  All the stakeholders, but no homeowners.  

 Second, the objective of the bill was to remove “all the contentious issues” and arrive at a bill satisfactory to all. So, those serious violations of homeowner rights will die each time CAI shouts, “HELL NO, WE WON’T GO”!  And of course, there ain’t nobody present to object.  

 So, that would explain what happened to the wording of SB 1333, the “clean elections” in HOAs bill?  A bill that, if passed, would severely cripple the political machine HOA boards and reduce HOA attorney influence.  A bill that would put an end to HOAs, under attorney guidance, finding ways to deny homeowners a legitimate voice in their governance.  But, there were no homeowners invited to the stakeholder meeting!

 Advocate Pat Haruff corrected the sponsor on this comment about “stakeholders.” No response from the Senator. That means that your pool guy, AC service man, landscaper, etc. are all stakeholders in your private property interests because they make money from you, the homeowner. And the legislators don’t need to hear from you! Welcome to how state legislatures are creating the New America of HOA-Land.

An argument against unlicensed management companies being granted exceptions to the unauthorized practice of law (UPL) laws was raised. While the bill would allow managers to represent HOAs in small claims court, it says nothing about homeowners being allowed to have their own unlicensed person speak for them. No one against the management company amendment portion brought up the AZ UPL decisions and opinions contained in AZ Supreme Court’s Final Order: HOA management firm engaged in unauthorized practice of law. Well, did you really expect CAI or AACM (manager’s association) to do it?  And believe me they know, because the management firm was both a CAI and AACM member.

 The CAI paid lobbyist once again falsely proclaims that CAI represents homeowners, failing to mention that CAI does not, and cannot as a business trade group, represent consumers — and HOAs are consumers of CAI member services. No one corrected him.

 I also got the feeling from the sponsor’s comments that the legislature was sort of tired of all these HOA bills, again and again, so wrap them into one bill and get it done with. I wonder if the annoyance is because they know that they are doing wrong to the people whom they are supposed to represent, and favoring the special interests. What about protecting the private property rights of the individual, a principle uttered so many times in so many arenas except in the HOA arena?

I can’t recall over the past 5 years many HOAs coming before the committees on behalf of HOA bills. No, it’s just the special interest vendors, the “stakeholders”, who live off HOA income who come before the committees. And nobody seems to notice. Yet, the homeowner who comes and/or writes is given short rift.  I’ve told several legislators over the years that we will be coming back year after year until they get it right.

 So, there it is! Homeowners are at the bottom of the food chain, with the legislators ignoring the principle that in a democracy citizens rule.  To paraphrase a statement in an address to the British prisoners of war by the Japanese commandant in the movie, The Bridge on the River Kwai,

 “Be happy in your home”

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!