As with any other type of organization, homeowners associations are vulnerable to legal action. More often than not, it is the community members who challenge the association. It is important that HOAs familiarize themselves with the most common homeowners association lawsuits to better prepare for any and all possibilities.
There are around 355,000 community associations in the United States. Out of these, it is not hard to find an HOA that has not faced any form of legal action from homeowners or vendors. This is because many homeowners use lawsuits as a way of dealing with disputes and problems in an HOA community. And while a lot of these are frivolous, some carry weight.
Here are the Top-9 most common HOA lawsuits:
#1 Misuse Of Funds
Homeowners associations are in charge of handling money — money used to pay for the community’s various expenses. But, where there is money, there is always a risk of theft and fraud.
Sometimes, board members will misuse the Association’s funds. They will use HOA money to pay for personal expenses or use it to pay for expensive dinners exclusively for the Board. While the latter isn’t technically stealing, it is still considered a misuse of funds since it is not being used for the community’s best interest.
When this happens, homeowners can sue the HOA or the entire Board of Directors under a breach of fiduciary duty or under the law. In more serious cases, the matter can even escalate and go all the way to HOA litigation.
#2 Architectural Request Denials
Another common HOA lawsuit has to do with architectural requests. Generally, homeowners who want to make architectural changes to their homes have to submit an application to the HOA. If the change does not coincide with the association’s architectural standards, it will be denied. Disgruntled homeowners who receive such a denial may take legal action to challenge the board’s decision.
Of course, there are times when the board’s decision to deny the change is unfounded. The homeowner’s architectural plans may be in line with the guidelines, and the board rejected the application either on a whim or because they dislike the homeowner. In either case, the homeowner can sue the board for not following the association’s regulations.
#3 Board Action Disagreement
Boards make all sorts of decisions all the time, but not everyone will agree with these decisions. Suing HOA board members out of disagreement is not uncommon. In fact, a lot of homeowners deal with their dislike of the board’s decisions in this manner. They feel like suing the HOA will put a stop to whatever it is they disagree with. More often than not, such polarizing decisions have to do with expenditures that homeowners have to pay for.
#4 Discrimination
Discrimination suits are very prevalent in the United States, and HOA’s are no exception. A disabled or handicapped homeowner may sue the HOA under the Fair Housing Act or the Americans With Disabilities Act. This usually happens when the association has failed to make reasonable accommodations for the person, or fails to maintain legally required standards.
#5 Failure To Comply With A Request
Homeowners will sometimes request to see or inspect certain association records, but their requests are not always granted. When that happens, some of them will take legal action to force the board to comply.
As with other lawsuits on this list, homeowners are not always right. There are cases where homeowners will request to inspect sensitive or confidential records, such as a list of delinquent homeowners. In such a scenario, the board’s decision to deny the request is completely reasonable.
#6 Failure To Maintain Common Areas
One of the more unique lawsuits against HOA communities involves the failure to maintain common elements or areas. This is also perhaps the most common HOA lawsuit.
When an association fails to maintain or repair a common element or area, homeowners will complain and even sue the HOA. Homeowners associations are responsible for common area maintenance and repairs. Failing to fulfill this responsibility can be grounds for legal action. The same applies even if the damages were caused by a natural disaster. Insurance may cover some of the expenses, but it is up to the HOA to have contingency funds exactly for such an event.
#7 Personal Injury
People have also sued HOA’s for personal injury, otherwise known as a “slip and fall” lawsuits. This lawsuit is based on the theory of negligence in that the HOA was negligent in its maintenance that caused the person to injure themselves. For example, if the HOA failed to repair the damages to a flight of stairs and someone trips and is injured, the HOA could be held liable for that person’s injury. Suing HOA for negligence is one of the more common lawsuits an association can encounter.
#8 Pet Disputes
When talking about Association lawsuits, pets don’t usually come to mind. But, surprisingly, homeowners have sued HOAs over pet disputes. This usually happens when a homeowner disagrees with an HOA’s rules concerning pets. For instance, a homeowner may want to keep more than three pets even though the HOA has a three-pet limit. They sue in an attempt to change the rules or to force the HOA to allow them as an exception.
#9 Violations
When homeowners violate community rules, the HOA may assess a fine against them. While some homeowners simply settle the fine, others will challenge the violation and sue HOA board members.
WHAT HAPPENS WHEN AN HOA LOSES A LAWSUIT?
Associations can lose lawsuits — it does happen. Homeowners associations are not the end-all, be-all of housing authorities. But, a loss is not always the end. If an HOA loses a lawsuit in a lower court, it can usually file an appeal in a higher court.
Losing a lawsuit certainly spells out a lot of negative effects for the Association. For one thing, they have to face the negative publicity that comes with such a loss, and adjust their by-laws accordingly. Another downside is that the HOA has to pay for all legal fees and may even be ordered to cover the cost of the homeowner’s legal fees.
If the HOA has the appropriate insurance coverage, it will make the financial burden lighter. But, if it does not have insurance, the HOA will have to pay for the costs using its funds, which technically come from the homeowners. To make up for these funds, the HOA will then need to levy special assessments or increase regular dues. Therefore, even though the homeowner wins the lawsuit against the HOA, everyone else has to suffer the financial consequences.
Having The Right Counsel
Homeowners association lawsuits happen frequently. Sometimes, the HOA is in the wrong, and the homeowner has grounds to sue. But, other times, the HOA is doing its job correctly, and the homeowner has decided to file a frivolous lawsuit as a way to try and get what they want. In any case, Association boards should be prepared for any possibility.
Finding an HOA management company that offers sound legal assistance connections to a wide network of reputable HOA lawyers is a great way to lessen this burden on the community as a whole.
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Having the right legal representation for your HOA could be the difference between quickly resolving issues and paying hundreds of thousands in legal fees. Visit MyArdent.com today to learn about our Preferred Vendors, and how we can help your community Association thrive.
A partnership with Ardent Residential means a hedge of protection for your Association, with Ardent’s Value Guard™ protection plan.
Value Guard™ is the only product of its kind, and guarantees against falling property values… CLICK HERE to find out more!
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Homeowners associations are in charge of handling money — money used to pay for the community’s various expenses. But, where there is money, there is always a risk of theft and fraud.
Sometimes, board members will misuse the Association’s funds. They will use HOA money to pay for personal expenses or use it to pay for expensive dinners exclusively for the Board. While the latter isn’t technically stealing, it is still considered a misuse of funds since it is not being used for the community’s best interest.
When this happens, homeowners can sue the HOA or the entire Board of Directors under a breach of fiduciary duty or under the law. In more serious cases, the matter can even escalate and go all the way to HOA litigation.
Another common HOA lawsuit has to do with architectural requests. Generally, homeowners who want to make architectural changes to their homes have to submit an application to the HOA. If the change does not coincide with the association’s architectural standards, it will be denied. Disgruntled homeowners who receive such a denial may take legal action to challenge the board’s decision.
Of course, there are times when the board’s decision to deny the change is unfounded. The homeowner’s architectural plans may be in line with the guidelines, and the board rejected the application either on a whim or because they dislike the homeowner. In either case, the homeowner can sue the board for not following the association’s regulations.
Boards make all sorts of decisions all the time, but not everyone will agree with these decisions. Suing HOA board members out of disagreement is not uncommon. In fact, a lot of homeowners deal with their dislike of the board’s decisions in this manner. They feel like suing the HOA will put a stop to whatever it is they disagree with. More often than not, such polarizing decisions have to do with expenditures that homeowners have to pay for.
Discrimination suits are very prevalent in the United States, and HOA’s are no exception. A disabled or handicapped homeowner may sue the HOA under the Fair Housing Act or the Americans With Disabilities Act. This usually happens when the association has failed to make reasonable accommodations for the person, or fails to maintain legally required standards.
People have also sued HOA’s for personal injury, otherwise known as a “slip and fall” lawsuits. This lawsuit is based on the theory of negligence in that the HOA was negligent in its maintenance that caused the person to injure themselves. For example, if the HOA failed to repair the damages to a flight of stairs and someone trips and is injured, the HOA could be held liable for that person’s injury. Suing HOA for negligence is one of the more common lawsuits an association can encounter.
Associations can lose lawsuits — it does happen. Homeowners associations are not the end-all, be-all of housing authorities. But, a loss is not always the end. If an HOA loses a lawsuit in a lower court, it can usually file an appeal in a higher court.
Losing a lawsuit certainly spells out a lot of negative effects for the Association. For one thing, they have to face the negative publicity that comes with such a loss, and adjust their by-laws accordingly. Another downside is that the HOA has to pay for all legal fees and may even be ordered to cover the cost of the homeowner’s legal fees.
If the HOA has the appropriate insurance coverage, it will make the financial burden lighter. But, if it does not have insurance, the HOA will have to pay for the costs using its funds, which technically come from the homeowners. To make up for these funds, the HOA will then need to levy special assessments or increase regular dues. Therefore, even though the homeowner wins the lawsuit against the HOA, everyone else has to suffer the financial consequences.
Homeowners association lawsuits happen frequently. Sometimes, the HOA is in the wrong, and the homeowner has grounds to sue. But, other times, the HOA is doing its job correctly, and the homeowner has decided to file a frivolous lawsuit as a way to try and get what they want. In any case, Association boards should be prepared for any possibility.
Finding an HOA management company that offers sound legal assistance connections to a wide network of reputable HOA lawyers is a great way to lessen this burden on the community as a whole.
A partnership with Ardent Residential means a hedge of protection for your Association, with Ardent’s Value Guard™ protection plan.
Value Guard™ is the only product of its kind, and guarantees against falling property values… CLICK HERE to find out more!
