Home is where the heart is. It is, according to most statistics, a families biggest investment and largest debt. In short, the home brings to the surface both extreme emotion and money issues. The home as a private place has been instilled in all of us from the drafting of the Constitution down. And where there is emotion, money and conflicting rights there will always be a need for lawyers. That is simply the hard and fast truth of the matter.
So, a real estate law practice, although parts of the practice might suffer inevitable ebbs and flows depending on the economy, the overall practice area always remains strong. For example, most real estate lawyers will tell you that when the economy is good, real estate closing practice is good. When the economy is bad, although more unpleasant, the legal work related to workouts, refinancing, evictions and foreclosures takes over. One area tends to offset the other.
But, like every practice area these days, the real estate practice area is large and there is a Third Wave need to find a niche. On such niche, that seems to do well regardless of the economy, for the reasons stated above, concerns community association law. These are often referred to as homeowner's associations (HOAs) or condo associations.
Community associations are prevalent for a number of reasons. A community association is usually a non-profit legal entity, typically created by the real estate developer who is or has developed a residential neighborhood, town home or condominium project, mobile home park, or apartment building, depending on where you live and what these units are called. There are also business or commercial community associations, but they are not as plentiful. From the standpoint of the real estate developer a community association can help it in developing, manage or selling the project while it is still in control. It can also make for an easier mechanism to legally, financially and functionally exit the project, once completed and sold out. It serves the homeowners in taking over control of the community from the developer in maintaining a project in a manner that attracted them to the property in the first place, and it allows them to have some control over what their neighbors do or do not do in a way that protects their investment or aesthetics. For the municipality, it usually allows it to increase its tax base while at the same time reducing the amount of service it would ordinarily have to provide.
Community associations have become increasingly common in the United States and most states within our country, and it is now anticipated that community associations govern 23 million homes and 57 million residents in this country as of 2006. And, at least until the downturn, those numbers are increasing daily.
You add to these numbers the relatively low number of attorneys that either represent community associations or lawyers that represent homeowners against community associations, and there is a niche to be filled. This is not to say that there are not visible attorneys working and marketing in the field. It is just to say there are fewer community association lawyers than would seem justified given the 23 million plus homes under community association control and growing.
The key authority enforced by most of the associations are what are referred to as CC&Rs, or covenants, conditions and restrictions. In Texas, these are just typically referred to as restrictive covenants. These CC&Rs are recorded in the property records when the property is subdivided and they follow the property as it is sold or transferred. Included in these CC&Rs is a provision for payment of periodic fees and costs.
Associations also service and maintain common areas, and often manage recreational amenities such as pools, clubhouses, gyms and walking trails. For all of these reasons they often levy assessments (sometimes referred to as "dues"), regulate activities and impose fines for non-compliance with the CC&Rs.
These associations do this by conducting meetings and electing boards among the property owners to manage these tasks. In reality, most associations hire management companies that assist them with these tasks. These management companies are most often for-profit businesses, and they sometimes operate the associations to maximize profits or fees for themselves. Since these management fees often make up a big part, if not the biggest part, of the community associations' assessments or dues imposed on homeowners, this can lead to issues that involve lawyers as well.
As a result, community associations are not always so popular. Zogby International once conducted a opinion poll on associations. Although it found that only one in eight had a negative opinion of their associations, you would have to believe that this the ongoing percentage of those that find themselves confronted by a community association attorney. That of course means legal fees.
Other surveys have shown that upwards to two-thirds of association residence are "annoyed" by the existence of their community association. They find that their associations are undemocratic, onerous, involve misconduct or worse. All of this is the normal give and take between associations and their residences and many of these are problems associated with any organization that has power over people. But, it is important to keep in mind that conflict in this sense means legal conflict. This means the need for and use of lawyers.
The luxury of most community association practices, if you can call it that, is that insurance is typically involved in the larger litigation issues by or against the association. Because of this fact, this large litigation is typically referred out to those lawyers approved by the insurance companies. Lawyers interested in extensive litigation practices can certainly solicit this business. This leaves, however, the ton of collection and enforcement issues (typically demand letters, monitoring, the filing of lien and foreclosures) to those lawyers that directly solicit community associations and their management companies.
This latter type of work typically involves fix fee types of business, that although not large in fees, is plentiful from a referral source basis. (In other words, you can achieve a small volume of this type of work from one referral source, and this makes it justifiably cost effective). And, although there are larger groups of attorneys that cobble together for this kind of work, this is the type of legal work that lends itself to the Third Wave practice of law, which means solo work or collaboration work with other attorneys, virtually, from home or small nondescript spaces. Most of it involves documentation, the telephone and certified mail, which can all take place from an attorneys' computer. There can be some court work, but it not typically something that requires large office space and huge support staff, if you do not want to organize this type of legal work in this way. This is because most of this kind of legal work can be formed out and handled quickly and efficiently. And, because it comes from a referral source that typically generates a lot of this kind of business, there is enough work for an attorney with just a hand full of these referral sources to make a comfortable living.
The establishment of community associations is also part of this, but typically this means working with the builder or developer in establishing bylaws, a non-profit association or corporation, filing the restrictive covenants in the property records, conducting the initial board meetings, instructing the builder or developer on informing all involved of these, and applying for any tax considerations. In short, all or most of if this type of legal work does not require fancy outside offices, preparing for trials, or jetting around all over the place. Most of this can be done from your computer and with a phone, and maybe a visit to the builder's or developer's office from time to time.
There are a number of attorney blogs, which you can follow on the subject, learned from and and from which you can get a feel for the practice. These include, for example, HOA Law Blog, Colorado Homeowners Association Law, Virginia Condominium & Homeowner's Association Law Blog, Northwest Condo & HOA Law Blog, Florida Condo & HOA Law Blog, Seattle Condominium and Homeowners Association Attorney, California Homeowners Associations Law Blog, HOA Law, and Ohio Condo & HOA Law Blog. One of my favorite sites, even thought it is probably not one of most sophisticated-designed site, is The California Condo Guru. The site is content rich and provides a lot of options, meaning information in a number of different formats, including a blog.
And, unlike mass marketed legal services, if you seek to represent community associations, although there are a large number of such groups, organizations and people to solicit for referrals over time, these are readily identifiable and are not infinite. This is important, because it allows you not to have to market broadly or expensively, in order to eventually find work and obtain contacts and referrals.
One of the groups with which you have to get involved is the Community Associations Institute. Not only are they an information, issues and advocacy group for community associations, management companies, attorneys and the like, but they have 60, typically active, local chapters as well. From this group you can begin to learn of the various management companies and community associations in your area. You can learn of those in charge, meet them and obtain contacts. And, from this you can build mailing, email blast and fax blast lists to follow up with them on a regular basis, along with any website and blog. Many community associations have their own websites and you can view those in your area and you can usually find most management companies in your area using Google. And, you might find some useful information on the Community Associations Network.
The point is that representing community associations, or representing property owners against community associations can be a niche practice for you, either as a stand alone specialty, or as an add on or addition to another type of real estate practice, or even maybe a bankruptcy practice. In short, if you are looking for a niche law practice, this is an area to which you ought to give serious consideration.
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