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I Wrote a Bill, er, Sort Of

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I wrote a bill.  Well, I helped write a bill.  But, I think after some massaging and changes, let's give the state legislator and her staff the credit. The idea I had was simple: CC&Rs and Association governing documents most always contain attorneys' fees provisions, whereby the Association has the contractual right to charge an owner attorneys' fees in pursuit of owner compliance or assessment collection.  Remember, the days when Boards and management were able to use fines to bully homeowners into submission, well, now, many boards use the attorneys' fees hammer to exact  justice.  Unfortunately, the HOA attorneys are all too quick to grab the handle and smash away. Here's how it's done...  Many CC&Rs allow for an award of reasonable attorneys' fees and costs when the Association is forced to take a homeowner to the courthouse.  But all too many CC&R drafters beefed up those provisions to read that anytime the Association pays a legal fee (even before there is a legitimate dispute), the Board has the opportunity to charge those fees back to a homeowner.  If a homeowner sends a challenging letter and the Board wants a legal opinion, the Board simply pushes the legal fee back onto the inquisitive homeowner.  Well, it's the contract, right? But what's dramatic and unfair about these provisions is that they are almost never reciprocal.  Why should a homeowner get the short end of the stick?  Why can't those obligations be the same for either party to the contract?  Why do Associations cry fowl if leaving the attorneys' fees issue to the court's discretion when the homeowner has only ever had to rely on the courts to decide a fee application? If you and I were going to enter into a contract where I sell you the Brooklyn Bridge, and I wanted a clear attorneys' fees provisions in case of a dispute, I think you might want the same.  Why would it ever be fair any other way? The bill that I wrote attempted to fix this simple inequity.  It stated that whatever attorneys' fees provisions the Association enjoyed in the documents should be reciprocal and enjoyed by the homeowner equally. The bill came out a bit different in its language, but HB2484 is moving through the legislature... Here's what it says: NOTWITHSTANDING ANY PROVISION IN THE CONDOMINIUM DOCUMENTS AND AFTER THE PERIOD OF DECLARANT CONTROL, A PROVISION IN THE CONDOMINIUM DOCUMENTS THAT PURPORTS TO HOLD A UNIT OWNER LIABLE FOR ATTORNEY FEES WITHOUT REGARD TO WHETHER THE BOARD, THE ASSOCIATION OR THE UNIT OWNER IS THE PREVAILING PARTY IN THE DISPUTE IS INVALID AND UNENFORCEABLE AND THE CONDOMINIUM ASSOCIATION AND THE COURT MAY NOT ENFORCE IT, AND SECTION 12-341.01 APPLIES AND IS ENFORCEABLE AS TO ATTORNEY FEES IN THOSE CONTRACTUAL DISPUTES. It seems simple enough - if there can't be anything reciprocal in the documents regarding fees, then why not level the playing field and let parties to CC&Rs rely on the statute that the legislature long ago put into place for  attorneys' fees issues in contractual disputes: ARS 12-341.01. But, the HOA lawyers are now spinning (reeling).  They call this bill HORRIBLE and DANGEROUS (in other words, they are worried about getting paid). Here's what one HOA lawyer commentator had to say about the bill:

... It  (HB2484) would create a situation where, regardless of the community documents, a provision in the community documents that purports to hold an owner liable for attorneys' fees without regard to whether the association is the prevailing party in litigation is invalid and unenforceable.  Rather, the bill, if enacted into law would use a discretionary standard of awarding attorneys' fees under A.R.S. Section 12-341.-01.

The somewhat veiled argument here is that HOAs and their attorneys believe that this would create more litigation and push Associations to the court house.  Maybe, just maybe, it would push HOAs to get better advice and receive proper warnings about the attorneys' fees issue before they rush to the court house.  Maybe we'd have much less litigation driven by attorney fees.  Maybe we would see fewer $2,000 attorney fee bills for $60 assessment delinquencies. In addition, this bill would cure one of the worst abuses related to attorneys' fees in many HOA governing documents: Boards will no longer be allowed to use a homeowner's ledger as the Board's legal fee checkbook.  Too many times have boards fielded a homeowner question or referred that concern to the lawyers and the homeowner finds that legal fee on her ledger the next month.  Something as simple as a document inspection request is turned over to a lawyer and the homeowner is charged attorneys' fees for exercising her statutory right to inspect records.  No lawsuit filed.  No notice given.  No judge's review of the charges. Yes, I *sort of* wrote a bill.  A few legislative types massaged the language and now a few more HOA lawyers and board member busybodies are trying to let everyone think the sky is falling.  Henny Penny wasn't concerned about judicial discretion, but the HOAs and their lawyers may be.  The judicial red pen will not be the end of Arizona's HOAs.  But just maybe, it might make things fairer.  

The post I Wrote a Bill, er, Sort Of appeared first on J. Roger Wood Law.


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