Blanket Authorization or Blank Check?
Dennis,
At this week’s open Board meeting, Tonto Forest Estates HOA has the following agenda item:
“BLANKET RESOLUTION for Attorney Authorization to Defend Against ALL ADRE Complaints.”
Our Board president PREVIOUSLY told members that using the HOA attorney in ADRE cases could cost approximately $6,000 per day, “whether the ruling goes in our favor or not.” He also said it was more fiscally sound for Board members to defend ordinary ADRE cases themselves and reserve attorney involvement for something “much more meaningful.”
NOW the Board appears to be proposing THE OPPOSITE: blanket authorization to use paid legal counsel for ALL ADRE complaints, big or small, even where the Association stands to gain nothing financially and attorney fees are non-recoverable. That looks less like a policy drafted in the HOA’s best interest and more like one drafted to create a steady stream of billable hours for Maxwell & Morgan.
This also seems like an end-run around ARS 33-1804: the Board takes one vote now, then avoids deciding future ADRE litigation and attorney-spending decisions in front of the members, case by case, with member input before each vote.
Is a blanket authorization like this just reckless spending and fiduciary irresponsibility? Since the HOA typically stands to gain nothing “win or lose,” does it really make sense for the HOA to spend tens of thousands of dollars on attorneys for simple OAH proceedings against pro-se homeowners?
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Fish7,
As for your point on the end around to 33-1804 for this resolution, I don’t see it as that. I believe it is no different that a board making a resolution that would allow two board members to spend up to $5,000 for emergency repairs or maintenance without a specific vote of the board. As long as that motion is made in an open meeting and homeowners are allowed to speak at that meeting on the issue before the board votes it’s a good way to do business for the community.
But the real issue here as you clearly state is the decision to use the associations attorney in all ADRE dispute cases. Here I agree that such a decision is imprudent and directly violates the associations duty to the homeowners to expend association funds prudently. The ADRE process is specifically structured to eliminate the need for either the homeowner or the association to use an attorney to represent themselves before the ALJ. As you state because the ADRE process is not considered legal action the prevailing party is not allowed to recover legal cost from the losing party. The process is directly limited to violations of the specific statutes governing these communities and the associations governing documents. If the association wants to avoid endless ADRE disputes they need only comply with the law as written or their own governing documents. Facts are facts and the association clearly does not need an attorney to present the facts on their actions before an ALJ. Conduct your business in accordance with the law and the governing documents and you will have ADRE cases to defend. Constantly ignoring the law or your own governing documents and you will be subject to endless ADRE disputes until you change your ways. This does not need to be hard. Trusting an attorney to tell you what the law means instead of actually reading the law yourself, will have you end up in endless legal battles.
I would not deny that in some situations it may be more complicated to present the associations case than be provided by a community manager or a board member and using the associations attorney may be prudent. But this motion eliminates any logical decision making and needlessly waste association funds, and could in and of itself be a cause of action against the association. If your association votes to take this action I believe they are taking the easy way out and not acting in a prudent manner for the community. Your association is willing to pay for their attorney’s Maserati, with your money instead of bothering to actually read the law and comply with that law.
Dennis