Saturday, March 02, 2013

Attorney represents association board, not the homeowners -

Attorney represents association board, not the homeowners -
David Bendoff is absolutely right, of course.  But it is interesting to note the way some other industry lawyers play games with this somewhat confusing relationship when they are doing the PR routine.  When some of these industry attorneys (such as the one I was on the air with on KNPR the other day--see below) are talking to the media and extolling the virtues of HOAs and condo associations they often claim that the owners ARE the association.  He used almost those exact words.

But then we descend from the clouds into the real world of association affairs and the actual relationship between the lawyer, the association, and the owners, which David Bendoff accurately and honesty describes. When an owner tries to get information from the association lawyer about anything specific, the lawyer refuses. Why?  Because he or she represents the association, which is a corporation with a separate legal existence, and not the owners. Going a step further, as David Bendoff explains, in reality representing the association means representing the board of directors, because the association is just a fictitious legal entity. The directors are the real client.  This is just the nature of corporation organization, and it is important to understand.  That's why I wish the media would stop uncritically repeating all the warm and fuzzy community/town meeting propaganda. This is a business arrangement.


IC_deLight said...

This is why reform/abolition groups should refer to the "HOA corporation" rather than the "association". The term "association" is inherently misleading to judges, juries, owners, and buyers. The term "association" is a nonsense word that is intended to to mislead.

When the term "association" is used, it is dangerously disarming because listeners think "group of homeowners" when nothing could be further from the truth. Ignorance on this issue has given rise to absurd statements such as "when you sue an HOA you are suing yourself", etc.

When one uses the word "corporation" folks recognize that the HOA is NOT the same as the members.

Fred Fischer said...

This legal representation situation is yet another intolerable act imposed upon property buyers when municipalities mandate the private ownership of common area’s /improvements within zoning codes like PUDs/PADs. Because it strips buyers of many of their constitutional, historic and other rights and protections through an adhesion contract that is required as a condition of sale.

Consequently this is where everything starts falling apart because the mandated fictitious legal entity called an (HOA, POA, condo etc.) association must be financially feed to fulfill its ownership and maintenance responsibility’s. So Boards most often turn to other businesses for advice and services who in whole or in part also depends upon the fictitious entity for their income as well. Except most often these private entities have no source of self income such as from commercial property rent. So buyers who purchase in CIDs must become members rather than property owners so they can be conscripted to both operate and most important to provide the entity’s operating funds. Furthermore as an insurance plan each members private property has an automatic lien placed upon it to assure the private entity has a permanent and almost unlimited income source into perpetuity. Unlike the members who manage and financially support the fictitious entity itself who don’t also have an equal or permanent income source to assure their existence into perpetuity as they have provided for the entity.

Finally the HOA industry claims that associations make better community. Therefore if CIDs really are of great benefit then shouldn’t the members who have the most vested financial interest, are paying all the expenses, taking on the risks and are liable for everything. Also be equally receiving the services, protections and benefits of attorneys which they are already paying for and if anyone has any doubts, just stop paying your assessment !

jitendra prop said...
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