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Q&A

Board has no right to bill owner for costs of fighting lawsuit filed against it by a tenant

Question: I received a statement from the homeowner association board claiming I owe a special assessment in the amount of $3,675.26 for the association's legal fees. The invoice claims I'm responsible for this amount because my tenant filed a lawsuit against the board and association for discrimination against her children. Included was a copy of a letter from the association's attorney to the board with an invoice for $3,675.26. The covenants, conditions and restrictions do not state that legal fees are reimbursable to the association by an owner; there are no rules and regulations that allow for special fees to be billed to an owner. I'm confused as to why the board includes me in this situation as I have nothing to do with the tenant's lawsuit against the board for bad treatment of her children. What happens if I ignore the invoice and don't pay?

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Answer: Discrimination against children is against the law. If the tenant's lawsuit was against the board and the association and not you as the landlord, then it is completely unreasonable for the association to drag you into its mess. It is also unreasonable to try to force you to pay the association's attorney's fees for actions that the board caused. The association's attorney's fees are a cost of doing business. As neither your covenants, conditions and restrictions nor the rules and regulations provide for reimbursable legal fees by an owner you have reason to prevent this from becoming a lien against your property.

Do not ignore this situation hoping that it goes away — it won't. Only the association board has the authority to put the assessment it issued on hold while you fight it. There is no way for you to avoid payment of an association-issued assessment, even one that is not proper, without the express consent of the association. In addition, you need to act quickly to avoid interest and late charges, which can ultimately lead to a lien on your property and, if left unresolved, foreclosure.

This could get costly for you. Therefore, if it's not too late to do so, before hiring a lawyer or filing a lawsuit, exhaust your administrative remedies. Make certain to obtain copies of the minutes documenting a motion and vote to charge you for these fees. Then, immediately contest this assessment in writing to the board and its attorney. This means sending a letter to the board objecting to the unilateral assessment and requesting an internal dispute resolution meeting pursuant to Civil Code sections 5905 and 5910. If the association does not otherwise provide a fair, reasonable and expeditious dispute resolution procedure, you may request a "meet and confer" meeting pursuant to Civil Code section 5915.

The board is required to meet with you to discuss this issue, and you may bring your attorney to all of these meetings. While this is being scheduled, you may need to pay the assessment under protest to prevent the association from taking action against you.

If you are unable to resolve this issue by the informal dispute resolution process, then it's time to request mediation and/or alternative dispute resolution before a neutral third party. If still unresolved, and the amount owed is within the jurisdictional limits, file a small-claims action to challenge the basis for the invoiced assessment. In the event you must take more formal action, you can probably recover any attorney's fees and/or costs you expend. It may be worth bringing this fact up during informal meetings with the board.

Zachary Levine, a partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian, JD, P.O. Box 10490, Marina del Rey, CA 90295 or noexit@mindspring.com.

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Copyright © 2016, Los Angeles Times
A version of this article appeared in print on March 27, 2016, in the Business section of the Los Angeles Times with the headline "Wrongly billed for legal fees - ASSOCIATIONS" — Today's paperToday's paper | Subscribe
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