Hotly argued by the condo industry and association boards is that condominium communities are self-governing, and that state, federal and judicial regulation of their administrations interferes with that “right.”
Yet, in this laissez-faire context nationwide, condo owners have lost their properties, resulting from imprudent board impositios of practices like immediate, unethical transfers to individual owners, of legal fees that board directors incur on behalf of their associations — a double standard of the convention that the party who hires legal assistance is the attorney’s client responsible for the fee payments.
When boards hire attorneys, or railroad owners into discussing disputes only with those attorneys, the fees ought to be paid from condo association funds every owner contributes to in their monthly dues. In most cases, boards do not inform owners, before they enlist legal services against them.
Hawaii statute Act 195 allows condo boards and owners to dispute issues with each other, and for prevailing parties to file for legal cost recovery. But boards, as their association attorneys’ clients, should not automatically impose legal fee reimbursement on owners, for any reason.
These reimbursement demands have effectively served as silencing and retaliatory devices by boards, since after unjustly being saddled with these charges, few owners dare challenge board practices. Without judicial oversight on boards’ questionable actions, it is obvious which party favors self-governance — their self-governance, leaving owners to plead for higher justice, at prohibitive costs.
And, where there is smoke from individual condo owners forced to pay illicit legal fees, there is often fire from lucrative kickback schemes of boards and their attorneys. Kickbacks and other ploys crafted by boards, their attorneys and often association management, are profoundly expedient when “self governance” prevails, and a clue to why management and attorneys refuse to support a reasonable 25% cap on legal collection fees they simply pass on to individual owners.
Moreover, higher penalties and late fees applied to the bloated unjust legal fee balances also affect maintenance fee dues that become delinquent as a result of the burdensome legal charges.
In fact, fantastic gains possible via associations’ dumping of their legal fees on condo owners has spawned law firm recruitment drives for rookies to be trained in the “lucrative field of condo law.”
Actually, condo boards and management fear legal action against them by tenants and outside parties more than they fear that of their associations’ owners whom they can swiftly put down with devastating legal fees that associations alone must be responsible for. Thus, a never-ending refrain is that grievances about wrongful actions by boards or other parties against owners are never rightfully resolved.
Ultimately, state and federal courts must determine justification for a condominium’s fraudulent actions, or dubious governing mandates. Yet, condo association boards and their attorneys have acted as their own judges and juries in disputes with their members; never mind that innocent people have been gravely injured in the process. No wonder boards jealously strive to protect their own brand of “self governance.”
But without the overarching zeal of courts and legislatures for basic justice ordinary citizens expect, our rights are greatly imperiled. It is heartbreaking to those who struggle to own a home, only to experience this outrage ending in loss of their homes.
Please support Senate Bill 2730 and House Bill 1857 to end unethical transfer of condo association legal fees to individual owners, and to cap collection legal fees to 25% of original principal amounts. Find out which legislators serve on the committees concerning consumer protection, then contact them to ask for hearings and passage of these measures. It matters.
Marcia Kimura is a Honolulu resident and condominium owner rights advocate.
