Discouraging renters conflict of interest with law firm management agreement association sued by member pitbull problems
By Michael Chulak The HOA Advisor
Q: Is it possible to amend our CC&Rs so as to discourage renters?
A: Yes. While courts discourage unreasonable provisions to prevent owners from renting their properties, there are a number of ways to do so in a reasonable way. You should contact an attorney whose practice includes this area of law. Not all attorneys have the experience to amend governing documents for common interest developments.
Q: Our homeowner association needed a referral to a law firm that would represent us on a contingency basis. Our management company made a referral and our board of directors subsequently signed an agreement with the law firm that was referred to us. The retainer agreement called for the law firm to receive 40 percent and the management company to receive 10 percent. The management company was required to provide some minor administrative assistance to the law firm. The case settled for millions of dollars and consequently the management company was paid several hundred thousand dollars for less than $2,000 worth of services! The members were never informed of the arrangement. As a member of the association, I am very concerned about this situation. What do you suggest?
A: You should be concerned about your board, the law firm representing your association and your management company. The situation you described calls for a confidential consultation.
Q: Our condominium HOA solicited and received a proposal for property management services. The proposal indicated that it was valid for 60 days. Our board did not get around to responding to the offer for more than 90 days and when we did so, the management company informed us that they were “no longer in a position to take on our property.” We were not expecting this to happen and are greatly disappointed. Does this happen often?
A: It doesn’t happen often, but it does happen. When a management company makes a proposal, it is implied that they have the capacity in terms of personnel to manage the property at that time. If time passes and the management company accepts other business, it may not be able to provide quality services to other accounts.
Q: Our management company recently recorded an assessment lien against the property of a delinquent homeowner. Before recording the lien, they carefully read the CC&Rs and then followed the requirements, only to find out afterwards that the CC&Rs were outdated and did not reflect the current law. As a result, we were sued by the delinquent homeowner and forced to pay a large sum of money to settle the case. Can we recover from our management company?
A: I believe you have a good negligence case. Your management company fell below the standard of care by failing to comply with the current legal requirements. The recordation of liens can have serious consequences and should be supervised by an attorney.
The situation you have described clearly illustrates the importance of amending your association’s CC&Rs in order to make certain they reflect current law.
Q: Someone just moved into our condominium association with a large pitbull dog. It hasn’t attacked anyone, but it is very aggressive and nearly everyone is concerned about it. Our CC&Rs are silent on the subject expect for permitting members to own up to two domestic animals. What should we do?
A: It would have been easier to prevent this problem by amending your CC&Rs before the pitbull was brought onto the property. Attempting to deal with the problem after the fact is much more difficult, but not impossible. The dog may constitute a nuisance which is probably a violation of your CC&Rs. More facts are needed to adequately answer your question. The lesson is clear, however: It is far better to address these types of issues with a CC&R amendment before the anticipated problem becomes a real problem.
Originally published in the Santa Monica Daily Press print edition on May 30, 2007. Read the original PDF.