HOA Lawsuits: Disclosure

Knowing how to handle a lawsuit against the HOA responsibly and professionally will help your association navigate this stressful situation with as little turbulence as possible. In this article, we’ll go over how to respond to a lawsuit and what the HOA can do to avoid legal action against the association.

Get the HOA’s Legal Counsel Involved

As soon as the HOA learns that a legal action has been or may be filed against it, the association needs to get its legal counsel involved. Lawsuits involve many strict deadlines that the HOA must meet, such as the deadlines for answering the suit and filing preliminary motions, and the association’s attorney can help ensure that everything is completed on time.

Preserve Discoverable Evidence

Once the HOA is on notice about a potential or pending legal action, it has a legal duty to preserve all items that could be discoverable in that lawsuit. Being “discoverable” means that the information or item is relevant to the factual or legal issues involved in the case, or that it may lead to the discovery of such relevant evidence, and must be preserved for potential disclosure or submission to the other party or the court. Any party in a lawsuit can request discovery of another party, which initiates the search and review of discoverable items.

Discoverable evidence may include digital and print records, physical items (such as a broken window or malfunctioning treadmill), computers and cell phones, financial documents (such as budgets and bank statements), medical records, text messages or emails, photos, social media pages, and the like.

So, when the HOA becomes aware of current or upcoming legal action, it should preserve all relevant documents (including notes, messages, emails, texts, images, and electronic files), retain any broken or damaged parts or other physical evidence, and take photographs of damaged property before making repairs.

Additionally, it’s important that the HOA, its board members, and its other agents and representatives refrain from making any oral or written admissions or statements, except as directed or approved by the HOA’s legal counsel. In other words, be careful not to create discoverable evidence that could be used against the association in the lawsuit.

Communicate with Homeowners

Another responsibility the HOA has during a lawsuit is disclosing to the association’s members the existence of all legal actions the association is involved in and providing general updates on the status of those actions. However, the HOA should not share any confidential information, including private communications between the board and the attorney concerning the case.

The HOA’s attorney can provide guidance to the board concerning what they should communicate to the homeowners and how. As with all board communications to homeowners, it is important that the board acts as a unified front: board members should provide one clear message together, and should never communicate individual, contradictory messages to homeowners. This muddles the association’s transparency and can create confusion and mistrust in homeowners.

Avoiding Lawsuits

While it is essential to be prepared in case the HOA is ever sued, taking preventative action to avoid a lawsuit altogether is always the best strategy. Here are a few tips to help the HOA avoid legal action:

  1. Properly maintain HOA property. To prevent legal action from homeowners injured due to old or broken equipment and facilities, the board can keep these items in good repair and have them maintained regularly.
  2. Seek legal counsel before creating or enforcing a new rule. To ensure a new HOA rule or policy is authorized by and is not in conflict with the HOA’s governing documents and that it complies with state law, the board should consult with the association’s attorney.
  3. Enforce HOA rules fairly and equally. Ensure that all community rules are enforced equally across all properties at all This simple tip is sometimes easier said than done and can be difficult to manage. This is why hiring a professional management company can save so much time and energy for board members, especially those in charge of larger and more complex communities.
  4. Grant variances when appropriate. When reviewing a request for a variance, it’s always good to consider why the homeowner is making the request, along with whether it will cause a hindrance to the homeowner’s neighbors and whether it will create an eyesore on the homeowner’s street. If the homeowner needs to make a certain addition or adaptation to their property so that they can have equal enjoyment and use of their property as their neighbors have, and the request is reasonable, then the board should grant it. The board should also keep in mind that once a variance is granted, it should be applied equally to other homeowners who request the same type of variance under the same or substantially similar circumstances.
  5. Make decisions at open board meetings and in accordance with state law requirements. A big part of gaining and building homeowner trust is to conduct HOA business where homeowners can see it. Many states recognize the need for transparency in HOAs, which is reflected in laws requiring HOAs to decide various items during open meetings of which homeowners have received prior notice.
  6. Communicate transparently with HOA members. Beyond conducting business openly, the board should put effort into keeping the community informed of any major changes, issues, and improvements in their community. Explaining the situation as it arises can also really help build the case for any tough decision a board needs to make, such as assessment increases.

 

In sum, if the board always strives to do what’s best for the community, enacts and enforces rules fairly, and maintains transparent communication with the membership, the board can help the HOA avoid lawsuits. However, if the HOA does become involved in a lawsuit, getting in contact with legal counsel and preserving any discoverable materials are responsible first steps to take to ensure the process runs smoothly. To learn more about how to handle the different responsibilities of being a board member, consider taking our HOA board member training course to hone your skills. 

Related Articles

Responses