Q&A

Towing scheme leaves distressed residents on the hook

Question: Our homeowner association consists mostly of retirees and some renters coexisting peacefully for more than 17 years. An election just shifted power on the board and the new majority hired new management. Directors immediately changed parking rules, then voted to implement citation-violations for all towed vehicles. This is lucrative for management but devastating for residents. The board contracted with management's recommendations for a tow truck company, security guard company and association attorney.

Every night when the sun goes down the tow trucks roll in, revving their engines and queuing for several blocks. All night long they tow vehicles, legally, illegally, it doesn't matter because it's the security guards' word against owners whose cars get towed. Residents wake to find their cars towed and pay steep fees to retrieve them. The vehicle owner pays management the fine. Then owners pay the tow truck company to release their vehicles. The tow truck company pays security guards their share of the take, and the security guard company pays management their share of the take. Management tells the board how much to pay the attorneys and the attorneys defend all the "players." We already know what the laws are, and they don't help us. Neither do the police. We want practical advice on how to stop this gang from operating here at our association.

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Answer: Security guards and towing companies must be licensed and have current contracts with the association in order to perform these tasks. Owners should request copies of licenses and contracts to better understand the terms under which these companies are operating.

In some situations, implementing reasonable fines including citations can be a cost-effective way for an association to ensure compliance with important rules and regulations. However, the misuse and draconian issuance of penalties as a means of generating revenue for vendors diminishes the quality of life for residents and is a waste of everyone's time and resources.

Owners need to obtain minutes where the fines and citations were created and voted on by the board, and obtain security guard and tow company license numbers to investigate validity.

Where an association has passed reasonable parking restrictions and provided sufficient notice to its titleholders, the use of properly licensed security guards and towing companies can be one way to shift enforcement costs to a third party.

Management's involvement with the attorneys may be against the bar's rules of professional conduct, which prohibit attorneys from sharing revenue with non-attorneys.

The board's duty of good faith and fair dealing regarding treatment of residents and titleholders, and its fair and reasonable implementation of authority, is never extinguished or delegated to a third party. It is the board's obligation to supervise all vendors, then take swift action against any vendor acting inappropriately. If not, the board shares liability with these bad actors. The board's failure to act subjects it to removal by the owners.

Although the towing scheme may initially appear to be a great revenue producer for the association and its vendors, it is short-lived. Improper enforcement of rules is a surefire way to rack up legal fees for the association.

Owners need to band together to challenge these transparent fines. Issue a petition to the board calling for a special meeting to remove all directors and elect a new board. The new board should obtain new counsel, review all issued citations and vendor actions, and then terminate contracts where necessary.

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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A version of this article appeared in print on January 24, 2016, in the Business section of the Los Angeles Times with the headline "Towing scheme leaves residents on the hook - ASSOCIATIONS" — Today's paperToday's paper | Subscribe
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