Question: When our association manager is asked a question, her answer is "The lawyer says...." When she makes that statement to owners and directors, they all believe her. When I asked the president about this, he said, "If you can't trust your employees, who can you trust?" The manager reduces the board meetings to arguing with and shouting at residents. None of the board members knows or totally understands the CC&Rs (covenants, conditions and restrictions, which are the governing documents of the association), by-laws and California corporation codes, so they sit there and let her get away with her charade. She shamelessly sends out letters threatening innocent owners with city codes that were later proved not to exist just to scare owners into paying for repairs the association was obligated to pay. She issues bogus fines against owners she does not like. Can the association be sued for allowing actions like this? Should the bogus fines be refunded?
Answer: The president and the board have a duty to investigate the credentials, experience, education and skills of the manager before he or she is hired. That means checking the validity of licenses and references, including speaking with associations, businesses and proprietors that may have hired this individual in the past.
The only person who can speak for the attorney is the attorney, not a management company employee. She is not an attorney and she probably has a vested interest in the advice she attributes to the lawyer. If the lawyer is discussing association business with the "employee," he could be violating his duty of confidentiality regarding the association-client's affairs.
Legal advice often has ramifications and subtleties that cannot be relayed secondhand. This secondhand information is so unreliable, even courts do not rely on it. Directors should refuse to rely on it as well.
Directors cannot delegate their obligations or duties to another without fear of incurring some liability; they are also obligated to approve any actions taken by their employees. They should not allow a manager to threaten, fine, mislead or penalize innocent homeowners for charges they did not incur or actions they did not take as that could get the board directors and the association sued. Charges improperly assessed to homeowners, if paid by them, should be refunded immediately, and although that may not avoid liability, it may go a long way toward showing a court that conditions have changed.
Managers do not have any "right" to attend or speak unless asked by a board director. The manager also does not have any "right" to attack homeowners or interfere with an owner's lawful right to address the board during open forum — and that is the law.
The late Stephen Glassman, an attorney specializing in corporate and business law, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or email@example.com.