It’s safe to say nearly every co-op or condo community has some kind of legal representation. But who does the attorney for your association or corporation actually represent? The owners or shareholders? The board? Both? Neither? Does it depend on the situation? The question often comes up when residents are at odds with their board or management company, and the answer may be more complicated than one might think. Perhaps a good starting point is to consider that, fundamentally, the attorney is there more to advise and consent than to represent.  

It’s Complicated

Where exactly does an association or corporation attorney’s loyalty lie? Well, for starters, ‘loyalty’ may be a completely inappropriate word. An attorney’s professional obligations are not a matter of loyalty. They’re neither a king, nor a friend to their clients. He or she is a professional hired by a community for his or her expertise.

In the context of a multifamily building or association, “It’s a complicated question,” says William McCracken, a partner with Moritt Hock & Hamroff, a law firm located in New York City. “An attorney’s duty is to the co-op corporation or condominium association itself, just like it is for the board members, managers, and accountants. Though to be precise, that can mean different things for a co-op versus a condo. In a condo, which is an association of owners, the association attorney’s duty is essentially to ‘the owners as a whole,’ which could be open to interpretation. However, in a co-op it’s different. The co-op is a separate legal entity, and one can at least imagine a scenario whereby the interests of the ‘entity’ don’t necessarily align to those of the owners—in this case shareholders—as a whole.”

Eric Lanter, of counsel with Offit Kurman, a law firm with offices in New Jersey, New York and nationally, explains that “most co-op and condominium buildings or HOAs have a corporate entity such as a limited liability company or corporation to conduct business. When that corporate entity hires legal counsel, counsel represents the entity and owes several duties to the entity. Because of this, the counsel does not represent the board or the residents.” And while the entity may be composed of members who are owners or shareholders, Lanter continues, there’s an important legal separation between the members and the entity which hired the attorney. The attorney’s duties are in the interest of the entity that hired him or her—not the component parts of the entity, meaning the shareholders or members.

Richard Brooks, a partner and principal with Marcus, Errico, Emmer & Brooks, a law firm located in Braintree, Massachusetts, casts some light onto what may seem to many to be a grey or conflicted area: “An attorney is hired by the board and is responsible to the board, just like any vendor—the snow plow guy, for example. The unit owners don’t deal with the attorney for the association, the board does. So in a roundabout way, the attorney represents the association but they do it through the board. Think of it this way: IBM’s attorneys report to the IBM board—not to a million individual shareholders.”  

More Grey Areas

There are other grey areas in the attorney-association-board-residents relationship, and they come in differing shades. For example, while the community’s attorney may be hired by and counseling ‘the entity,’ in the real world they also may counsel the board or the community members from time to time.

“Truthfully,” says McCracken, “most of the time it’s simple. The association or corporation attorney does whatever the board tells them to do, because the board is the designated decision-maker and agent for the co-op or condo. However, there can be situations in which the lawyer may decide that the community’s interests are not being served by the board, and perhaps in that case the lawyer has an obligation as a fiduciary of the co-op or condo to countermand a directive by the board. That puts the lawyer in a very difficult position.”

“People ask me about this at community meetings all the time,” says Brooks. “The community’s attorney responds directly to the board. But that doesn’t mean he or she doesn’t have an ear to what the owners want. The primary relationship though, is the attorney to the board. So for instance, the attorney sends notices to owners on legal matters as instructed by the board. A notice may go to owners about who is responsible for the upkeep and maintenance of decks, for example. That’s more direct contact between the community attorney and the owners, but I explain to owners that our duty as legal counsel is to respond to the board. If all owners were able to call the office just to ask questions, there’s no way I could respond to everyone. If an owner or shareholder wants to fight with the board over something, they would have to hire their own attorney.”  

When Counsel Seems Hostile

Despite legal obligations and attorney-client relationships, residents do have a say in their community. If the community’s attorney is unresponsive or hostile to their concerns, residents can take action in accordance with their association’s bylaws or other governing documents. “Those governing documents will provide a process for making changes, such as potentially bringing in a new attorney to represent the community,” says Lanter. “Hopefully, the new attorney will be more responsive or be amenable toward the residents.”

According to McCracken, if residents feel the association or corporation attorney is unresponsive to their concerns, the first thing they should do is take their concerns to the board. The board is their elected representative in all matters, “And, as such, the board has the power to direct the attorney to be more responsive, or to replace him or her,” he says. “If the board refuses to do anything about the problem, the residents’ bigger issue may be with their board, not with the attorney—in which case they should vote out the board when they can.” 

Given that an attorney represents the whole association entity and not the owners individually, explains Brooks, being contacted directly by a unit owner with a complaint against the board or association often puts association attorneys in a difficult position. 

“Most lawyers just won’t take the call,” says Brooks. “I’m not obligated, but I do speak with owners if they call. And I tell them, ‘Don’t tell me anything you don’t want my client, the board, to know, and I will forward along what you’ve said.’ Honestly, a unit owner wouldn’t call the tree guy or the snow plow guy; Well, it’s the same with us. The association attorney is a vendor, and deals directly and only with the board.”

Lanter concurs, adding that “if residents do contact their community’s counsel, they should understand that the attorney does not represent them (at that moment anyway), and that unless the resident is seeking for the attorney to represent them personally, the conversation may not be privileged, and definitely may be shared with the board.”

Caught in the Middle?

There may be times when an association’s or corporation's attorney finds themselves in the middle of a conflict between the board and the owners or shareholders. Their course of action depends to a great extent on what the conflict is about.

Brooks cites a relatively benign situation: “When a board does something incorrectly—say they assess condo fees by wrong percentage interests or on some other basis, say per unit—and we see what the board is doing, but it’s not criminal, our duty is to tell the board they’re not correct. It would violate ethical rules to tattletale that to the community. In these situations, the board will almost universally follow our advice and get on the right track. In a criminal case—say if one board member is stealing money—we tell the other board members to do something about it, and they do. Usually it’s the manager stealing the money, and we have to tell the board. The owners aren’t our clients, and because of the ethical rules for attorneys, we can’t tell them about the criminal activity.”

McCracken says that again, “It goes back to the issue of who the lawyer represents. Usually, the lawyer will rightfully be taking direction from the board, but there may be rare and unusual circumstances where a ‘rogue’ board requires the lawyer to take direction from the person or persons best representing the owners as a whole. That could conceivably be a group of owners, but it would be a rare case indeed.”

If residents feel that the attorney their monthly fees are paying for isn’t properly advocating for them, shareholders and owners can look to their governing documents to see how they may be able to make a change. “Often,” says Lanter, “if enough residents agree, they can help facilitate that change in attorney, and potentially have better counsel to represent the building or HOA. However, it’s important for residents to understand that the building or HOA’s attorney is not an advocate for all the residents individually. There may be times when the attorney’s actions representing the building or HOA also benefit the residents, but there can also be times where the attorney’s actions are adverse to the residents’ interests. This is why, for residents, it may be preferable to hire their own counsel to make sure that their best interests are protected.”

So often, the cause of acrimony and conflict between residents and their board-management team is not malfeasance, but misunderstandings about how these communities are administered and governed. The relationship of the association’s counsel to the association and by extension its residents is frequently misunderstood by shareholders and owners. While it may seem to residents that their building’s counsel should be there for them, the attorney is hired by the entity to counsel the elected representative of the community, the board. If members feel that the attorney isn’t representing their best interests as a community, it’s time for a change of counsel. And probably a change of the board, as well.

A.J. Sidransky is a staff writer/reporter for CooperatorNews and a published novelist. He may be reached at alan@yrinc.com.