I live in Monroe county PA. We are having huge issues with our board of directors that include illegal practices against our very own by-laws. We are about to embark in a major legal battle with the board of directors, but they are using the money we pay into the association to cover their very own legal costs. As homeowners within the association, can we pay our dues and other fees into an escrow account until we settle out matters in court?

Hello T:

Can you do it LEGALLY?? Only if your by-laws allow it...

But, I do it anyway, and let the judge sort it out. I certainly don't believe there is any DOWNSIDE from doing so.

Yeah, your board isn't going to like it. So?

excon

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Originally Posted by excon

Hello T:

Can you do it LEGALLY????? Only if your by-laws allow it....

But, I do it anyway, and let the judge sort it out. I certainly don't believe there is any DOWNSIDE from doing so.

Yeah, your board isn't going to like it. So?

excon

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Thanks Excon for responding so quickly.

One thing though, for starters; as this would be quite unusual, there is no mention of escrow in our by-laws. Our greatest concern is Pennsylvania law concerning this particular matter. Will the courts consider it legal for us to do this in Monroe county Pa? (Poconos Pennsylvania/ Stoudsburg area)

We'd prefer a court order for us to get this done legally. It would be much more likely that homeowners of the association would be more prone to depositing fees into one escrow account, as opposed to just telling everyone to do it on their own.

So to clarify my question... Can we do this in Monroe County PA?

Lets back up a second here. You are "about to embark in a major legal battle with the board of directors". You are doing this without an attorney? The Board won't hesitate to hire an attorney, so if you go into a legal battle against an attorney without your own legal representation then you start with two strikes against you. Before you go any further you NEED to get an attorney.

To answer your question an escrow account is always legal, except if expressly prohibited by law. I don't see any reasons it would be prohibited in this case. The worst that will happen, is the judge will deny the validity and order that the funds held in escrow be immediately turned over to the board.

By the way, its pretty standard for such by-laws to include a clause allowing the board to use HOA funds to defend themselves in a lawsuit. So I doubt if them doing so is illegal. On that basis, the court will In my opinion, disallow the escrow account. That doesn't mean you shouldn't set it up, I think you should. I don't think you will be penalized for doing so.

Hello again, t:

In my view, what you can and can't do are embodied in your by laws. If the bylaws are silent, then your state contract law would be the guide.

It would be my further viewpoint, that contract law doesn't address this particular matter specifically.

Therefore, the "reasonable" person theory comes into play. The law doesn't get specific about every possible situation. It couldn't.

Therefore, it would certainly show your good will to the court, and I believe it will serve you well to do it.

I understand that you'd like the courts blessing before you did it... I don't blame you, but I don't know if you'll get it...

I don't even know if you've hired a lawyer yet, or filed your lawsuit, or if your lawsuit is about to be ruled on, or anything...

If you're just getting started, you're not going to get court approval before your dues are due, in any case.

So, in my view, escrow would solve at least your SHORT term problem. Certainly your first move is to hire a lawyer, and to inquire about escrow with him.

I can't tell you how a specific judge would rule on ANY case. I wish I could.

excon

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Originally Posted by excon

certainly your first move is to hire a lawyer, and to inquire about escrow with him.

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Bingo!

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Originally Posted by ScottGem

Lets back up a second here. You are "about to embark in a major legal battle with the board of directors". You are doing this without an attorney? The Board won't hesitate to hire an attorney, so if you go into a legal battle against an attorney without your own legal representation then you start with two strikes against you. Before you go any further you NEED to get an attorney.

To answer your question an escrow account is always legal, except if expressly prohibited by law. I don't see any reasons why it would be prohibited in this case. The worst that will happen, is the judge will deny the validity and order that the funds held in escrow be immediately turned over to the board.

By the way, its pretty standard for such by-laws to include a clause allowing the board to use HOA funds to defend themselves in a lawsuit. So I doubt if them doing so is illegal. On that basis, the court will IMHO, disallow the escrow account. That doesn't mean you shouldn't set it up, I think you should. I don't think you will be penalized for doing so.

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ScotGem, ironically enough, we DO have an attorney. Love'em to death for what he's done thus far in prepping us for our legal journey; however, he said specifically, that in "Monroe" county, the court does not recognize the escrow. I'm basically trying to get a second, or better said; a creative opinion on how to get this task done.

If it were solely up to me, I'd open up a separate account in my own bank and do it; however, our goal here is to kind of cripple our board by not allowing them access to the cash register (so to speak). This will take setting up a far more credible strategy of having one "Legally recognized" escrow account in which multiple homeowners can deposit their funds.

Hello again, T:

If you have a lawyer ON THE GROUND who is familiar with all the facts, I'd believe him.

If you don't, get one that you do. What I wouldn't do, is get "creative" on your own lawyer and second guess him.

So, forget about starving them. Now, you'll have to beat them because you're RIGHT.

Perish the thought.

excon

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Originally Posted by Tictoc

ScotGem, ironically enough, we DO have an attorney. Love'em to death for what he's done thus far in prepping us for our legal journey; however, he said specifically, that in "Monroe" county, the court does not recognize the escrow. I'm basically trying to get a second, or better said; a creative oppinion on how to get this task done.

If it were solely up to me, I'd open up a seperate account in my own bank and do it; however, our goal here is to kind of cripple our board by not allowing them access to the cash register (so to speak). This will take setting up a far more credible strategy of having one "Legally recognized" escrow account in which multiple homeowners can deposit their funds.

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I agree with excon, you have a lawyer, then trust him or replace him. Don't try getting "creative" behind his back. That will just hamstring him.

So what you do is you go back to the attorney and ask what would be the consequences if you set up the escrow and the homeowners all deposited their fees into it? If the consequences are, as I said, that the court will disallow it and order the moneys turned over, then I would still go ahead. But if the consequences would be penalities assessed against the plaintiffs or even alienation of the judge, then I would not go ahead.

And again I mention that the by laws may allow the Board to use HOA funds to pay their legal fees. If so, then your attempts to cut off the cash register may be prejudicial to your case. In that case its not worth it.

A lot depends here on why you are suing them and what you think they have done wrong. It may be that you can include in your case a request that, if they lose, the Board reimburse the HOA for their legal expenses.

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Originally Posted by ScottGem

I agree with excon, you have a lawyer, then trust him or replace him. Don't try getting "creative" behind his back. That will just hamstring him.

So what you do is you go back to the attorney and ask what would be the consequences if you went ahead and set up the escrow and the homeowners all deposited their fees into it? If the consequences are, as I said, that the court will disallow it and order the moneys turned over, then I would still go ahead. But if the consequences would be penalities assessed against the plaintiffs or even alienation of the judge, then I would not go ahead.

And again I mention that the by laws may allow the Board to use HOA funds to pay their legal fees. If so, then your attempts to cut off the cash register may be prejudicial to your case. In that case its not worth it.

A lot depends here on why you are suing them and what you think they have done wrong. It may be that you can include in your case a request that, if they lose, the Board reimburse the HOA for their legal expenses.

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I'd like thank both; excon and scotgem on your efforts to answer my question.

They were extremely helpful.

ScotGem
I will go back to our attorney and pose the question you suggested. As far as what our board is doing... let's just say that we will make a major mark on the HOA vs homeowners score board. There's major corruption going on in many HOA's throughout the country, and we (Select few Homeowners that are fighting) plan on making a difference, starting with ours.

Thanks again for your help.

Time for change,

Tic, toc