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CalAttorney2
CalAttorney2, Lawyer
Category: Real Estate Law
Satisfied Customers: 10238
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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We have an HOA of 16 units here in Colorado. We

Customer Question

Hi,
We have an HOA of 16 units here in Colorado. We had just discovered today that the decs and bylaws were changed and deception was involved, Specifically we were voting on a change to the decs and bylaws regarding insurance and the HOA oresident slipped in a line regarding deleting a part of the decs and bylaws pertaining to who the management company is. In short no one knew it was in there and no discussion was involved and because of the deception it was voted on and passed. We are the mngt. company and obviously feel like we were betrayed by the HOA president. She had made an effort previously and it did not work and then she did it deceptively. What can/should we do?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  CalAttorney2 replied 1 year ago.
Unfortunately as the management company, you would not have standing to contest this issue. (if you were an owner/member of the HOA you may have a cause of action, but as the management company you do not).It is highly irregular for the CC&Rs to dictate who the management company is. This is generally a decision that is left to the Board for the board to determine, and not a matter that is set by the CC&Rs. (The CC&Rs are designed to set a framework for governance, they are not supposed to dictate the day to day operations of the HOA - that is the function of the board, selection of a management company, HOA attorney/counsel, accountants, maintenance, groundsekepers, etc. are all board duties.).
Customer: replied 1 year ago.
we own 2 of the 16 units there
Expert:  CalAttorney2 replied 1 year ago.
I am still not entirely sure that you have a cause of action. Just because the president didn't make a big deal about the change, or draw attention to the issue, does not mean that it was deceptive.You say that the changes were voted on, the primary cause of action in CC&R revision lawsuits is that there is a violation in voting procedure (failure to give notice of the revisions (please note: the board must give notice that there are revisions, they do not have a duty to give you a detailed line item); and failure to follow voting procedures (this is where most issues happen - improper quorums and improper voting majorities). If you can identify issues with either of these two issues, you may have a claim, but again, as I noted, it is irregular to have a management company dictated by the CC&Rs.
Customer: replied 1 year ago.
it was written into the decs and bylaws that we were the mngt. co. because we were the developer
Been in there for 15 years
Customer: replied 1 year ago.
What the president did was send out an email stating in the email what the changes were and then provided attachments.
The attachments were lengthy and nobody caught the change in eliminating the mngt co. clause
Expert:  CalAttorney2 replied 1 year ago.
You can try to fight it (file a breach of fiduciary duty claim), but I don't think you have much of a shot.Quite frankly, developers that try to force themselves into management positions are not viewed very favorably by the courts (the developer is the one that controlled the drafting originally, they have set themselves up as the management company, and now they want to force the other owners to keep paying them - it is unlikely that the court is going to enforce such a provision).
Customer: replied 1 year ago.
We all feel dupped by the action of the president as she has alterior motives for what she did and extremely saddened the way she persued this as it was clearly deceptive practice. Can you touch on the breach of fiduciary claim. Again we have been mngt. for 15 years and everyone is happy with us other than her?
Expert:  CalAttorney2 replied 1 year ago.
It is a civil lawsuit you would have to file - I don't recommend filing it yourself - you would want to retain a lawyer to do it for you.Once you sue the HOA, you are going to get the HOA's insurance involved, they will retain counsel and the matter will get expensive for both sides. It is likely that the HOA's insurance rates will rise (including your assessments).You may win (I don't think you have a very good claim, but a local attorney can go over your fact pattern with you and review your actual correspondence and give you a formal legal opinion (remember, all I can give you here is general legal information based on general HOA practice), if you do, you can get a second chance to have the CC&Rs passed through, which may or may not include the provision you want.The HOA's insurance counsel may advise the HOA that their CC&Rs need to be revised differently (again, just my 2 cents - I have drafted a lot of CC&Rs, I don't put a management clause in any of them (even when I am drafting for developers), and you may find yourself in the same spot - just 2 or 3 years down the road.(Of course it is also possible that you can get the CC&Rs revised so that your old clause is in place, and if your CC&Rs have an attorney's fees provision, you will get your attorney's fees paid for (keep in mind, the fees clause "swings both ways" so if you lose you owe the HOA for their fees).I do not provide telephone calls - my hourly rate is far in excess of the small fee charged for this "Q&A" session, and I do not wish to provide the impression that we have an attorney/client relationship through this forum. If you desire a phone call, you can post a second question and post in the initial question that you are looking for "Additional Services" and another expert will provide you with an offer giving their fee for this additional service and additional instructions.
Customer: replied 1 year ago.
let me add something here........
The gal behind all of this has actually been renting her own condo herself for the last 5 years
In the decs and bylaws it states that we are the mngt. company and you must use us to rent your condo if you decide to rent it. (understand we are a overnight accommodation business). If we find that you are renting your condo yourself there is $100/ day fine for doing so. The decs and bylaws were changed a year ago, do you suggest we go after here for the 4 years she rented without us and try to collect the $100/day fine?
Expert:  CalAttorney2 replied 1 year ago.
I cannot advise you one way or the other (keep in mind, I am not your attorney and cannot give you legal advice).As the management company, you would be collecting the assessment on behalf of the Association (you would not be collecting the fine on behalf of yourself), so going and assessing the fine against the president's landlord (the owner) independent of HOA instruction is probably not a very good idea, but you can pursue it if you like.
Customer: replied 1 year ago.
wow, feel completely blindsided here.
as it was complete misrepresentation/deception...........
just does not seem fair............
Expert:  CalAttorney2 replied 1 year ago.
I am sorry about this. Unfortunately I believe that the attorney that helped you set up your governing documents in the first place had given you some false expectations of what you could expect with regards ***** ***** the sole provider of management services via the CC&Rs, but with regards ***** ***** CC&R revisions, if they followed the proper procedure they are probably going to stick.

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