Final Order: HOA management firm engaged in unauthorized practice of law

Every state has rules regarding the unauthorized practice of law governing what activities constitute acting like a lawyer.  The certified Legal Document Preparer Board of the Arizona Supreme Court found AAM, LLC, both a CAI and Arizona Association of Community Managers (AACM) member, had engaged in such activities, which are commonly found in many other HOAs and with many other management firms/managers. (In Arizona, it’s Supreme Court Rule 31). 

In regard to AAM, many of the State Bar’s Hearing Officer  findings were dismissed and overturned in the Board’s May 24, 2012 Findings of Fact and Conclusions of Law (LDP-NFC –09-L094 and LDP-NFC-10-L026,   not to be found on the State Bar or Supreme Court websites).  The Board found AAM had exceeded its authority as a certified document preparer and violated Rule 31 in that, among other things,

  1. represented the HOA in violation of Rule 31, including signing and submitting lien documents as such were not incidental to its regular business activities;
  2. submitted documents that it had prepared to third-parties, such as collection letters, and filing court motions and complaints;
  3. represented HOAs in small claims court;
  4. although there existed a contract between AAM and the HOA to act as a representative of the HOA, such a contractual arrangement is subject to Rule 31, which cannot be overridden by private agreements;
  5. offered legal advice when it gave, through newsletter statements, made statements about “possible  legal rights, remedies, defenses, options or strategies;”
  6. through its offers to “coordinate payment plans” debt payment plans, AAM was not giving general information but was offering to negotiate with the HOA on behalf of the homeowner;
  7. “offered to negotiate homeowners” legal rights, remedies, defenses, options or strategies;”

 

It is interesting to note that former Arizona Supreme Court Chief Justice Zlaket was called as a witness by AAM.  He stated that “the purpose of the certified legal document preparer rules as protection of the public from charlatans who didn’t know what they were doing, from document prepares who were harming customers by preparing the wrong documents.”

 

 The full, detailed, 55 page Board document can be found at Legal Document

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8 CommentsLeave a comment

  1. HOA’s play a vital role in keeping neighborhoods looking their best. Sometimes this goes to an extreme and people are singled out. It is a shame when this happens. But it is also a shame that we have to have an HOA in place to keep property values at their highest. If people were more responsible for their property I think HOA’s would disappear. As a property manager in Tempe Arizona this hits close to home. I will be reviewing several of my contracts to ensure I haven’t crossed the line.

  2. […] amendment portion brought up the AZ UPL decisions and opinions contained in AZ Supreme Court’s Final Order: HOA management firm engaged in unauthorized practice of law. Well, did you really expect CAI or AACM (manager’s association) to do it?  And believe me they […]

  3. […] Please note, however, the co-plaintiff is an HOA management firm and is barred from filing HOA petitions by statute. It is the same management firm hit with the UPL ruling that it engaged in the unauthorized practice of law. See Final Order: HOA management firm engaged in unauthorized practice of law […]

  4. UPL 12-01 – Scope of Legal Services to HOA’s (March 2012)
    (http://www.azbar.org/ethics/unauthorizedpracticeoflaw/opinions)

    Except under limited circumstances, non-lawyers employed by community association management companies would be engaging in the unauthorized practice of law by drafting documents for and providing legal services to homeowner and condominium associations under Rule 31, Ariz. R. Sup. Ct., and Arizona Code of Judicial Administration § 7-208.

  5. Thanks for posting this informative post.I really appreciate to the writer. Can you also please post on property management or you have already something posted on this topic.

    HOA management

  6. […] all states since they all has UPL rules. This blog entry follows just a week after my Commentary, Final Order: HOA management firm engaged in unauthorized practice of law, was […]

  7. Even though I have never had problems with HOA a friend of mine does and so I became involved. We are trying to get as much information as we can as the more I read about HOAs and their practices the more disappointed I am.
    I come from Europe where living in a neighbourhood with HOA is an exception. I had a hard time getting used to it. I’ve read many articles and blogs describing what should I pay attention to and how not to get in trouble. But this is ridiculous! Sometimes I just think our lives would be so much easier without them.

    • Absolutely – we don’t need HOA’s – they are only people who want to boss other people – and hold a fist over the owners.


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