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Conflict questions arise about law firms representing HOAs, banks

By Mary Shanklin, Orlando Sentinel

Disputes pitting community associations against banks have left some questioning whether law firms should represent both sides.

Disputes pitting homeowners associations against banks that owe fees on foreclosed houses have left some questioning whether the same law firms should represent parties on both sides of the fight.

Jan Bergemann, president of the Cyber Citizens for Justice association watchdog group, said this week that law firms should not represent both groups.

“That should be a conflict of interest,” Bergemann said. “Banks normally like to postpone as long as possible the moment they are the deeded owner. The homeowner association, meanwhile, has an interest to foreclose as soon as possible.”

One firm that represents both banks and associations is Greenspoon Marder, with offices in Orlando and elsewhere in the state. Firm co-founder Michael Marder said his group guards against conflicts and is comfortable doing business with organizations at odds with one another, such as banks and associations.

“We don’t operate on an ideological basis,” Marder said this week. “We have a large firm with a broad base of clients, and we try to ensure we have no conflict.”

One of Florida’s largest law firms specializing in associations, Becker & Poliokoff, also has some mortgage companies for clients. It has, for instance, represented Emigrant Mortgage Co. in cases against several associations, including the condo association for The Grande in downtown Orlando.

Chris Draper, who oversees the firm’s Orlando offices, said there are instances in which Becker & Poliokoff represents both an association and a lender that owes money to the association. But the parties all sign waivers acknowledging they are aware of firm’s various clients.

“I don’t think it does a disservice to the association, as long as they sign a waiver,” Draper said. “The bank is going to get what it would otherwise under statutory obligations.”

Sean Galaris, president of association-debt collector LM Funding, said law firms convince associations to sign conflict waivers, but association members may not realize the full extent of what they’re signing.

“These boards are signing away their rights without really understanding what they’re signing,” Galaris said. “It’s a monetary issue. They’re representing banks on one side and associations on the other and the arguments are completely opposite. How can they zealously defend both sides?”

Some association experts also question the role of law firms in lobbying for laws that dictate how much banks must pay associations in overdue fees. In 2010, for instance, Draper said Becker & Poliokoff was among the law firms that lobbied to double the amount of time that banks would be forced to pay in past-due association fees, from six months to 12 months.

Despite the law, banks rarely paid more due to a provision that allowed lenders to pay either 12 months of late fees or 1 percent of the mortgage, whichever was less. The mortgage calculation was almost always the lower amount, so the law changed little.

Draper noted that the law could have been revised in a way thaat benefited associations more, but Florida has a powerful bank lobby. Even though his firm represents some commercial lenders, he said he believed Becker & Poliokoff represented community associations as it lobbied for changes.

Another law firm that specializes in representing associations and that lobbied on the bill was Katzman, Garfinkel and Berger, with offices in Orlando and elsewhere in the state. Donna Berger said her group tried to get greater provisions for associations but those were quickly shot down in legislative committees.

“If we could get banks to pay more, it would have already happened,” said Berger, whose firm makes a point of not representing lending institutions.

mshanklin@tribune.com or 407-420-5538

Copyright © 2012, Orlando Sentinel

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