Tag: UPL

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”

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. 

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!