The role of the board of directors is to enforce the rules of your homeowners association. Unfortunately, they tend to get a bad reputation from residents… and it’s not always the residents’ fault. The reality is that there are associations that don’t know what they’re doing at the risk of getting sued.
To prevent your association from making costly mistakes, you should consider hiring an attorney. In this article, we will outline the reasons why you should work with legal counsel, and what you should do when drafting the contract.
How can an attorney help your HOA?
Homeowners associations (HOAs) are non-profit organizations, however, they’re still treated as corporations. This means that they aren’t exempted from following state rules and regulations. If an HOA goes against its governing documents — even if unintentionally — it could find itself in court. Hence, it would be wise for an HOA to have legal counsel that can be on call at any time. Here are a couple of reasons why you should consider hiring an attorney for your HOA:
#1 Legal Expertise
Your board members may be knowledgeable about property management, but they probably don’t know everything. They may be passionate about the HOA, but they lack professional training. On the other hand, an HOA attorney has the expertise in navigating the intricacies of Covenants, Conditions, and Restrictions (CC&Rs), state laws, and so on. It’s crucial to select an attorney who specializes in housing laws so that in case your HOA finds itself in a pickle, it can consult with a professional.
#2 Creation of Governing Documents
Every HOA is required to have governing documents. This includes CC&Rs, rules and regulations, and the bylaws of the association. These are the documents that outline what the association and its members can and cannot do. They are also the basis for identifying HOA violations.
It’s important to note that the HOA’s governing documents are subject to federal, state, and local laws. Hence, your HOA can’t simply create rules that they think are right. If your HOA attempts to create rules without consulting the law, they could end up creating unenforceable rules. An HOA attorney can prepare these documents for the community.
#3 Legal Representation
Your HOA will have to deal with disgruntled homeowners at some point. An HOA attorney can help your HOA deal with these disputes, especially since legal proceedings can be lengthy and complicated. They can also represent your association in case contractors don’t carry through their contractual agreements.
An HOA attorney can also ease tensions among homeowners or even among board members. They’re trained to mediate to prevent matters from escalating.
#4 Rule Enforcement
Not everyone is going to agree with the rules and regulations of your HOA. However, as homeowners, they are required to abide by them. An attorney can help ensure that everyone in the community strictly complies with the rules. If there are issues concerning the interpretation of these rules, they can clear things up, since they were the ones who wrote them, after all.
#5 Legal Consultation
Sometimes, your HOA might not know how to handle a specific situation. Without an HOA attorney, they will attempt to interpret the law themselves. Your HOA needs to understand that it should treat carefully, as seemingly small mistakes can result in discrimination charges, harassment, and so on. If your HOA has no clue on what to do, they should consult their legal counsel. Alternatively, they can speak to their association management company.
What should you include in the HOA attorney contract?
When your HOA decides to hire an attorney, it should always create a contract. This formally “starts” the professional relationship between both parties, and protects them in case of disputes. While there are plenty of contract templates out there, it’s always best to tailor them to the specific needs of your association.
In general, here is what should be included in the contract:
Even though it’s generally understood that the attorney represents the association, this should still be stated clearly in the contract. It should state that the attorney represents the entirety of the association and not its individual members. For instance, if a homeowner has legal trouble with his business, the HOA attorney can’t help him, as the homeowner’s interests are separate from the community.
#2 Scope of Work
Not specifying the attorney’s scope of services is a common mistake among many HOAs. When this happens, the attorney can refuse to do certain tasks. They can shrug and say that it’s not included in their contract. To ensure that the contract covers everything your HOA could need, it is crucial to spell out their scope of services. Furthermore, if the attorney fails to do what they’re obligated to do, your HOA can use the contract to support their complaint.
The contract should indicate the exact amount your association should pay the attorney, including retainer fees, legal fees, and so on. Never sign the contract if your attorney tells you that you’ll “figure it out” along the way.
Additionally, the contract should itemize the services that the attorney is supposed to deliver. Since attorneys are billed by the hour, it’s important to clarify how much each service costs. You don’t want to be billed for basic correspondence such as phone calls. Alternatively, you should ask your property management company if they can provide legal counsel for your HOA community.
#4 Length of Contract
How long will the attorney be working with you? Contracts should always specify the length of the contract. If it’s not made clear, then the attorney can leave whenever they want or stay as long as they want.
If the lawyer or law firm’s fees increase each year, it may be better to arrange a long-term contract. Don’t be afraid to come to a compromise with your legal counsel.
A word of advice — carefully review the contract before signing it. Be sure that both parties’ expectations are explicitly stated in the contract. If you have a property manager, you should ask them to take a look at it, as well.
If you’re uncomfortable with getting locked into a contract with an HOA attorney, you can always turn to a property management company for help. At Luxury Property Care, we make it a point to stay up-to-date with the law, so that we can guide you to the best of our ability.