HOA Nut House

I would challenge that one.....that Arizona law appears unconstitutional on its face. Since in most documents and communities the only independent authority most Boards have to bring suit is over MAINTENANCE assessment 'collection' matters only, with the PURPOSE OF ASSESSMENT language worded that 'assessments must be used EXCLUSIVELY for the health, safety and welfare of the residents, or maintenance and improvement of the common area' The attorneys lobbied for this provision, most of which to protect their butts in some of the unlawful and illegal 'advice and counsel' these HOA attorneys have been giving to these Boards over the also unconstitutional laws they have bought in Arizona the past 10 years.

Since those are 'public funds' I would challenge that the statute itself is constitutional at all, and the Board's fiduciary duty prior to spending any monies of the Association for legal fees other than those specifically provided in the document, those laws were 'attorney' created for their benefit. They now believe that the attorney/client privilege is to protect THEM, and not the client. And the 'client' actually is the Association, and it is the members monies that are at stake.

An 'industry' protective law, and not constitutional on its face as far as I'm concerned, and intended to feed the attorneys coffers and not protect the harmony of the community or 'rights of enjoyment' or financial viability or 'welfare' of the members AT ALL.

That is the law in this state, as well. It is most certainly NOT unconstitutional. In fact, it does protect the homeowner association and the homeowners, not the attorney. There are times - and pending or proposed (or contemplated) litigation need to be covered by attorney-client privilege. The client is the corporation and like it or not, the corporation is represented by the board of directors. Although the board represents the corporation, the attorney does NOT represent the board and certainly does not represent individual board members. Some homeowner don't understand this distinction, and frankly, neither do some association attorneys.

That said, there are times where the board DOES need to have privileged conversations with the attorney. If 500 homeowners attended such a meeting, not only would the association lose any attorney-client privilege on the matters discussed, but the likelihood of legal strategy "leaking" to an opponent is how many times greater? The loss of privilege is important. Most homeowners do not realize that this would occur because they do not understand that an individual homeowner is not the "client".

In this state, one protection that is provided HOA homeowners is a statutory requirement that ANY litigation over $100,000 (damages) be approved by a majority of the membership at a membership meeting, before such litigation commences. This is, in my opinion, very important. I do believe there are attorneys out there that are not very ethical and are more interested in lining their own pocket with lawsuits (win or lose doesn't matter to the attorney) at the expense of the client corporation. I have seen this, and it turns my stomach. I also know there are many good and ethical attorneys - just like any profession. I still believe that the legal profession is an honorable profession. I do wish the state bars would do more to sanction unethical attorneys.

I have been at such a membership meeting, and it was a delicate issue. One very bright homeowner kept asking astute questions, that I could not answer without giving away critical strategy. The answers I gave were direct regarding the nature and scope of the proposed lawsuit, but evasive on those specific issues. Afterwards, I took that homeowner aside and explained that he asked all the right questions, but they were "too" right, if the association wanted to recover monies that it lost which were the subject of the lawsuit.

These are the reasons for closed meetings during strategy discussions between board and lawyer on proposed or pending litigation. This is one area where there IS a legitimate reason for the statute. Now only if there were more statutes protecting homeowners, so these kinds of lawsuits wouldn't have been necessary in the first place, but that is an entirely different subject.

You might want to study 'corporate personhood' also - since the assets of the corporation are public funds, disclosure and approval essential in order to protect the 'property' of the owners.

Please give me an example of where a shareholder of a corporation is privy to the meetings between the corporate board and the corporate attorney on litigation matters.

Since you mention corporate "personhood" then you should well understand why the Corporation is the client and not every individual shareholder. And if you know so very much about law, then you would also understand that deliberate inclusion of a third party in a discussion between a client and "his/her" attorney will waive attorney-client privilege on those matters discussed.

If you really want to know about this, I suggest you look it up. I would suggest asking an attorney, but you wouldn't believe any attorney anyway. So go do the legal research yourself.

Jake...

You must be an attorney.... a 'corporation' is 'property' given no 'rights' at all under the Bill of Rights, it has been successive abridgements of the Constitution which have given 'corporations' rights the founding fathers never intended. 'Commerce' was to be 'regulated' not given rights.

I don't need to ask an attorney, I worked in the field for many years, and have first hand experience with corporate/contract law attorneys, and the attorneys giving 'advice' in these communities are actually 'collection and foreclosure' attorneys with a 'vested' interest for their trade association in misconstruing the law with respect to these communities.

And non-profits have much stricter accountability for the expenditure of 'public' sums, and most documents do not give the Board any authority whatsoever to spend sums for legal matters, except for maintenance assessment collection.

And it is these 'public' sums that are being used against members....with Boards even purchasing indemnification policies from these attorneys and management concerns, who are acting as 'brokers' gaining coverage for their 'illegal' acts in these communities.

'Commercial' corporate law is quite different, but you have a 'choice' when the corporation starts litigating as a shareholder, you can sell your shares. And commercial corporations are required to inform shareholders of suits in their reports or upon request.

The 'client' is actually the 'corporate' assets of the members, and bond coverage was intended for the Boards initially as non-profits, which require background checks and indemnification procedures.

I suggest you do a great deal of research, because you totally misconstrue what the attorney/client privilege was initially created for, and it's applicability.

"Arizona law states that the Board can have a closed session meeting if there is pending or contemplated litigation. Who can help me get an interpretation of what exactly "contemplated" means?" Clark Hurlbert

Arizona's 47th Legislature passed SB 1007 (Senator Chuck Warring, bill's sponsor) which amended ARS 33-1258 (condominiums) and ARS 33-1805 by prohibiting an association from withholding books and records pertaining to contemplated litigation. SB1007 became law on September 21, 2006.

Further, SB1007 amended ARS 33-1248 (condominiums) and ARS 33-1804 (planned communities) permitting a board the right to meet in closed session pertaining to the records of the association related to the personal health or financial information about an individual member, an individual employee or an individual employee of a contractor for the association.

Prior to SB1007, associations and their attorneys used "contemplated litigation" to deny members their fundamental rights to the association's books and records as well as its conduct and actions.

Absent a Carnac-esque ability to divine that which is in another's mind, associations, boards of directors and their attorneys' belief what another is contemplating is as irrelevant as any such assumption ("contemplated litigation") is reckless.

[See ARS 33-1804 and 33-1805, Arizona Revised Statutes]

Many of you also need to realize that there is 'special interest' political money going into some of these statutes, which have been 'bought' by the industries for their own protecton. 33-1804 is one bought by the attorneys, for their protection and not the 'Association' or membership at all. And until there is some realization that many of these statutes are not even constitutional on their face, you basically are suing your neighbor, but that will never resolve who is really calling the shots in these communities, not the constitutionality at all of many of those state statutes on their face.

I don't know about Arizona, but some state statutes say that the Board has a fiduciary duty to the members. Unfortunately, the statutes also indemnify Directors of non-profits against claims of negligence, which is pretty typical. And, the "business judgment rule", when it comes to Associations, has been intepreted so loosely that almost no action a Board does is too idiotic not to fall within the "rule." No documents indemnify against willful misfeasance, nor could they.

And, I suspect that most people are well aware of the lobbying money that affects legislative decisions. This one, however, is absolutely constitutional "on its face", and to say otherwise is patently absurd. And, it doesn't answer Chuck's question, of course.

Chuck, you might request a written opinion as to the meaning of "contemplated". Do your statutes have a provision that requires a board to provide a legal opinion upon a homeowner's request? If you can get something in writing, you will have more ammunition.

No state may grant 'privileges and immunities' and under Arizona's Constitution that is clearly stated....so that 'indemnification' statute unconstitutional, thus, on it's face. And also no entity can be 'indemnified' by any state statute against personal or property harm or injury to another, and that is Law 101.

The 'business judgment rule' also with non-profits is much different than 'for profit' corporations. Non-profits 'request' donations, the amounts it can retain in it's 'operating' and 'surpluses' subject to I.R.S. scrutiny, and the accountability much more restrictive, especially since these are corporations that are 'adhesive', and any attorney that also states otherwise leading you on.

And get a quote from that attorney before you have him 'research' the word 'contemplated' and how it could even conceivably apply to an accountable non-profit corporation, where 'public' sums are being used, and few documents even allow Boards to spend member monies on any litigation outside collecton actions.

According to you, everything is "unconstitutional on its face." And you have no idea what you are talking about.

It is long established corporate law to "protect" directors on boards from some degree of negligence, on the theory that directors should not be punished for making business mistakes. It is called the "business judgment rule." AND THAT IS CORPORATE LAW 101.

In fact, MANY and MOST documents provide for legal action to enforce the covenants, bylaws, and other matters that concern the association. Again, if you read that many documents, you would know this. Once again, you are very very far off the mark. This alone tells me that you really don't know what you are talking about and are talking out of your a**.

And I know you hate lawyers and everything under God is "unconstitutional on its face." I wonder why you hate lawyers so much. Venm as palpable as yours does not appear out of thin air. But I'd just as soon not know - I don't have that much interest in the root of your hatred.

I hope that others who read your absurdities can see through them.

What is amazing is that your idiocy has made me come come close to DEFENDING that which I find nearly indefensible. Your blindness is stunning. It would be funny if it were not so alarming, that anyone actually thinks this way. Or perhaps you are merely a troll.

And it is clear in the above comments, the 'arrogance' and 'disrepect' that appears to run rampant in the 'legal industry' and profession at this time.

Whether it is 'long established' that statute by Arizona's Constitution itself, most assuredly, unconstitutional. And it is 'long established' that no one can be indemnified, an individual or corporate entity, from damage to one's person or personal property. And the 'corporate assets' in especially a non-profit corporation are the 'property' of the members. And the 'business judgement rule' most assuredly much different for 'non-profits' than 'for-profit' corporations, requiring much more accountability, and by most of the older documents, acknowledge that fact and prohibit Board's for expending any sums independently other than for the 'maintenance' of the Association owned property, without votes and consent of the members. I have my 1985 documents, and they so state as do many other communities which were 'incorporated' prior to the CAI concocted documents now found which are actually ridiculous on their face.

Your maturity level appears about 12 with the above comments, Jake, and really not worth any more of my time, and with such a display, any wonder why there are many Americans, not just myself, who have a negative view of the 'legal industry' many of whose members have no respect for anyone, and use verbal abuse of others both in and out of the courtroom for other who do not agree with their views. The Constitution is not a lengthy document, and historically it is quite clear that it has been misapplied judicial and legal interpretations that have created the mess we are now are facing in this country, with the 'freedoms' which the founding fathers fought and died for just a distant memory.

Your interpretations are really quite creative, meant to confuse and astound as with the new training, it would appear, which must be occuring in our law schools at the present time.

The business judgment rule requires no more accountability with a non-profit than it does with a for-profit.

I have no idea where you are getting your information, but it is wrong. Can you actually cite a case or a statute for any of the positions you are spouting? I doubt it.

Your 1985 docs may say that, but most docs of that vintage DO NOT. I can give you dozens of examples, but I don't think you would let the facts get in the way of your take on the law.

I am not interpretating, I am stating black letter law. I don't believe I have ever come across anyone with such bizarre ideas so contrary to law, who so stubbornly insists they are right. Where did you get your law degree? A cracker Jack box.. the "close cover before striking" school of law?

Have you studied corporate law? If you did, you would not be saying what you are saying. It is ludicrous.

I suspect you are a troll. Nobody could be that belligerently ignorant, not even renegade board members.

You do not seem to understand that your opinion does not change the law - regardless of how loudly you shout. Would you like me to quote you some statutes? Or how about a hornbook on corporate law?

I do not understand what you gain from this irrational refusal to acknowledge what is actually very basic law. Corporate law has LONG held the business judgment rule immunizes corporate officers (for-profit and not-for-profit) for certain acts that could be deemed "poor business judgment". A private person cannot "take" property, in the sense of a Constitutional "taking". The Bill of Rights protects persons from governmental abuse - not from the abuse of private corporations, except in very limited circumstances.
I already mentioned what those cases were.

As long as you come here belligerently misstating the law, I will continue correcting you. The very last thing homeowners need is to believe what you are saying and get themselves in deeper sh** than they may already be in.

If you think my statements of black letter is "creative" then I guess you would say the same of courts, legislatures, legal precedent for 250 years...

There are ways to challenge unjust and unfair laws. Shouting that the law is what you wish it were IS NOT ONE OF THEM.

All you can possibly do is to further confuse people, and give them bad advice. And since it is abundantly clear that you do NOT know the law, and are NOT an attorney, you should refrain from giving legal advice.

I hope to God you refrain from giving legal advice, because your "advice" could really hurt someone.