With so many financial responsibilities associated with running a homeowners’ association, maintaining legal counsel may seem like an unnecessary expense. But in many situations, competent legal expertise is a vital asset to an HOA board as they navigate the complexities of running a successful community.

Why Your HOA Needs Legal Counsel

If you’re still unsure, you might be surprised to learn that the need for legal counsel may arise more often than you think. Here are five common situations during which your HOA may need to rely on its legal representation:

  1. Governing documents. An association’s laws, bylaws, and CC&Rs (Covenants, Codes, & Restrictions) need to be reviewed annually by the board. An attorney should be called in to assist if amendments are needed. Additionally, articles of incorporation, violation and hearing, and other policies are governed by law and may require legal guidance to amend and approve. An attorney should also draft the founding governing documents of a new HOA to ensure state recognition and compliance.
  2. Fees, fines, liens, & foreclosures. If a homeowner fails to pay monthly dues, or has a long list of violations, an attorney may be required to obtain the outstanding balance. They will also be able to file a lien against their home and eventually foreclose on the property, if necessary.
  3. Negotiation. Even the best negotiator needs assistance when it comes to the legal aspects of certain situations. Professional legal counsel can simplify difficult negotiations with financial institutions, contractors, and vendors.
  4. Insurance. A primitive knowledge of HOA insurance can limit the board’s ability to properly manage the association’s insurance needs. An attorney can be useful in navigating complex insurance claims, as well as negotiating and adjusting specific policies including earthquake, fire, and water.
  5. Financial matters. Boards hold important fiduciary responsibilities that are essential to the financial well being of the HOA. Legal consultation is advisable in order to ensure total compliance with all laws and regulations.

An Important Relationship

HOA boards are comprised of volunteers, and even the most competent board will need to rely on legal counsel from time to time when situations exceed their knowledge and abilities. It is crucial that board members maintain a close and positive relationship with their attorney to protect the association and its valued members.

Choosing the Best Representation

Boards should consider carefully the legal counsel they decide to retain. Many attorneys have little knowledge of HOA laws and regulations and will be of little use in association-related matters. If your board uses an association management firm, they may have recommendations for an attorney who is well-versed in common interest development, real estate and business matters, and who will be key to developing and maintaining a properly run association.