HOA Engaging in the Unauthorized Practice of Law?

State Bars take a strong stand against persons who are not lawyers or licensed paralegals providing advice, filing forms, or preparing documents that affect your legal rights. That means, telling you what the law or governing documents say about why they can do what they are doing! It happens every day, everywhere, in all states. The regulation of the practice of law can be found in the statutes and Supreme Court rules of every state. They are complex and detailed, but my summary is correct. (For Arizona see, Supreme Court Rules, VI. UNAUTHORIZED PRACTICE OF LAW, Rule 75 et seq.)

In 2004, the Arizona State Bar Advisory Opinion, UPL 04-02 – Property Management Companies, addressed two important issues that occur quite frequently in many HOAs. They are:

1. May a property management company prepare documents such as late payment notices, demand letters seeking payment of rent or association fees, and eviction notices relating to the property being managed? Yes, if the preparation of such documents is incidental to the regular course of the property management company’s business or if the documents are prepared by a certified document preparer.

2. May a property management company prepare and record liens relating to the property being managed? Yes, if the preparation and recording of such liens is incidental to the regular course of the property management company’s business or if the liens are prepared and recorded by a certified document preparer.

The opinion clarifies (1) above that,

However, preparation of documents such as eviction notices or late payment notices constitutes the practice of law . . . if they are intended to affect a property owner’s legal rights relative to a property owner’s tenant. And therefore, the manager is engaging in the unauthorized practice of law (UPL) when a state law or governing document requires such an act. Otherwise, the notice has no legal effect, according to the Opinion. Also, these notices are not incidental to the HOA property manager’s duties.

In regard to (2) above, filing of liens, the Opinion states;

[A] property management company’s preparation and recording of a lien constitutes the practice of law, because a lien is intended to affect either the property owner’s rights relative to a tenant or a homeowners’ associations’ rights relative to an individual homeowner. Additionally, because a lien is filed with the County Recorder, the preparation and recording of a lien is also the practice of law. Again, if not incidental and performed by a certified paralegal. With respect to a 3rd question on representing the HOA before tribunals, the Opinion said no way. Of course, it may supply information to the HOA.

The delegation, and many times absolute delegation, to HOA managers/companies by the HOA board does not permit the manager to act as an attorney and to violate the law. If you are subject to any of the above UPL violations, file a complaint with your State Bar, giving the details and evidence, and stating the management company name, if any, and any CAI or other managers association membership. Let’s get the facts out. Only you can clean up this mess with HOAs!

Courtesy: George Staropoli.

This article is not intended to be specific legal advice. It only provides general legal information. You should consult a licensed attorney if you have a legal issue.