Class Action Filed Against AZ HOA Management Companies

Class Action Lawsuit Filed by Arizona Homeowners Against Arizona HOA Management Companies Alleging Millions of Dollars of Damages for Violations of Federal Debt Collection Laws and Arizona Law

(Phoenix, Arizona – September 20, 2012) – Two Arizona homeowners, have filed a class action lawsuit against twenty-seven Arizona community association management companies (“CAMs”).

There are thousands of Homeowners Associations and Condominium Associations in Arizona. A majority of those HOAs contract with management companies to assist the HOA and its Board with the day to day operations of the Association.  In addition to the every day tasks, some Arizona CAMs also have made agreements to assist HOAs in collecting past due homeowner assessments.

The complaint alleges that these CAMs, acting as third-party debt collectors, have engaged in unlawful activities in their attempts to collect past due assessments from Arizona homeowners.  The plaintiffs allege that the CAMs have and continue to pursue Arizona homeowners by charging collection costs and related fees that are not authorized by law.  Public court and county property records show that CAMs have wrongfully filed and recorded thousands of liens, lawsuits and judgments in violation of the federal Arizona Court Rules, the federal Fair Debt Collections Practices Act, the Arizona Constitution and Arizona’s wrongful lien laws.

The plaintiffs allege that the CAMs’ collection activities violate Arizona’s rules regarding the unauthorized practice of law.  The public record shows that CAMs sign and record liens, file lawsuits, negotiate the legal rights of third parties, appear in Court and collect fees for these services.  Arizona law does not allow non-lawyers to act on behalf of a third parties in legal matters.  Such activities require a law license and these violations trigger liability under federal debt collection laws.  The CAMs’ unlawful fees for these activities have cost Arizona homeowners millions of dollars.

The lawsuit seeks to end these unlawful practices and also seeks an award of damages for the named homeowners and the thousands of other Arizona homeowners who have been victimized by these CAMs and their unlawful collections activities.

The Law Offices of J. Roger Wood represents Arizona homeowners who have disputes with their Homeowners Associations or Condominium.  Watters and Watters are trial lawyers representing Arizonans in civil litigation, including employment issues, toxic exposures and other serious injury matters.  The firms are working together on this case, seeking to right these serious wrongs.  They can be contacted at info@jrogerwoodlaw.com or legalhelp@watterslaw.com or at the telephone numbers listed above.

Posted in Assessments, Litigation.

6 Comments

  1. Inquiring Minds Want To Know:

    23 of the 25 management companies in the Crame-Leatham vs. 360 Management, LLC et al., Rouge’s gallery of defendants are identifiable as members of Community Associations Institute (CAI) and many are also members of Arizona Association of Community Managers (AACM).

    Skiba (CAI) and Lincks (AAMC) must be so proud of their Arizona associated members’ management companies’ adherence to CAI and AAMC’s code of ethics and membership standards which find them defendants in the pending class action lawsuit.

    • Bill – thanks for the help with the math. But I’m more concerned with the thousands of homeowners who have fallen victim to these alleged unlawful tactics and the related fees that have been charged. While I know you to be no fan of the HOA attorney bar, at least there is some licensing body and a Supreme Court that hold lawyers accountable for their actions, fees, etc. CAI and AACM do not license anyone and from what I understand do not have a history of holding their own members accountable for such actions.

      As always, thanks for your comments.

      Roger

  2. Pingback: Are Management Companies Under Attack? | HindmanSanchez

  3. Accusation does not make for guilt. The trial is likely to hinge on how much of the debt collection each company did, and what efforts they took. Most CAMs stick to sending letters, and don’t even make calls. The transfer of the debt to a 3rd party collector is only is usually authorized under the CC&R’s, so the plaintiffs are going to have to prove that the fees added to the account were somehow egregious or illegal. Most CAMs don’t charge the homeowner for collections, they charge the HOA; and the HOA in turn demands that the fees be charged back to the Homeowner, it may be circular, but if thats the arrangement then its going to be very hard to prove that this is the CAM’s fault. I’ll be curious to see how this plays out, as collections is such an issue with HOA’s due to the economy.

    • Guy – thanks for your comment. While I don’t disagree with some of your analysis and comment, part of the claims are about these companies and how they ignore Arizona Supreme Court Rule 31 by practicing law without a license. It isn’t so much about proving the fees themselves illegal, but the behavior for which the fees are being charged.

  4. I’m glad to see this finally come to a head. I’ve watched as these management companies have advertised “no cost” collections and other “no cost” services to associations.
    Since the associations don’t know any better, they think it’s a good deal. But, everyone seems to have forgotten that associations are pass though companies and only pay tax on a small portion of income. The HOA must pay all the expenses and when applicable can be passed on to the owner for reimbursement. The HOA cannot contract with a vendor then tell the vendor to bill an owner directly. Which is what these “no cost” services are designed to do. But, they do it all the time with liens and other collection services.
    It’s one of those things that sounds real good when you say it really fast.

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