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Can a lawyer demand that, in a foreclosure/collection lawsuit, any monies tendered by the homeowner be paid to him first?
Anonymous8 views3 answers
A law firm drafts a written collection policy for his client, a homeowner's association, regarding the procedure by which the HOA will collect past due assessments. The written collection policy states that all monies tendered toward past-due assessments and associated legal fees incurred in the collection process must first be applied toward the legal fees, and only then toward the past-due assessments. The homeowner disputes the legal fees and pays ALL past-due assessments, but the law firm applies them toward the legal fees first, such that the HOA does not get paid. The HOA files a foreclosure action against the homeowner. Are there any federal regs that prohibit such a practice? Is there a conflict of interest between the law firm and the HOA? Ethical violation?
The real answer will be found by reviewing your HOA covenants. Having said that, though, it is very likely that the homeowner is responsible for paying the costs of collection and that the account is not current until all the costs AND the late fees and other assessments are paid in full. Unfortunately, the only way I know of to avoid expensive collection costs is to keep the payments current in the first place.
The HOA is responsible for paying the attorney fees and the covenants and bylaws doubtless provide that the homeowner is responsible for any fees and collection costs incurred by the HOA. It is not surprising that the law firm requires the HOA to pay the fees out of collections and if it did not, the HOA would simply have to pay the law firm and add those fees onto what you owe. Either way, your balance would be the same. The HOA has the right to foreclosure for your failure to pay the legal fees that are due pursuant to the covenants and by-laws.
There is absolutely nothing unethical about the HOA attorneys requiring payment for the work they do.
Unfortunately, it is very difficult to challenge the often extraordinarily high fees charged by HOA attorneys. You can seek a hearing in Court, but if you are not wholly successful, you will end up having to pay for the time spent by the HOA attorney defending your hearing. Any real solution probably has to come from the legislature. You could call your state representative and see if they are interested in passing legislation regulating the fees that get passed through by HOA attorneys.
