HOA Lawsuit

My HOA is considering filing a lien against a non paying homeowner (three years delinquent) and the homeowner has threatened in writing to file a lawsuit against HOA because restrictions are not being enforced. We have heard that if there is a pending suit with the HOA, anyone in the HOA trying to sell their home cannot close until suit has been settled. Is this true? Some HOA members do not want the lien filed because of the fear of a lawsuit. The HOA carries $1 million in liability insurance to protect BOD.

Kathy, I would give the owner 30 days written notice that a lien will be filed unless payment is made or a schedule of paying has been agreed upon. If no satisfactory response is received file the lien immediately.

If your HOA is not enforcing violations of restrictions they should do so immediately. Irrespective of the threat of a law suit. But, don't allow an owner to try to coerce the Board with a threat.

Suing a HOA is suing yourself and your neighbors. If this person wants to sue let them. Lawsuits aren't necessarily what they are made out to be. It is MUCH cheaper for the HOA to COUNTERSUE anyways.

I was in a similar situation with someone who refused to pay their dues/special assessments. We went ahead with the foreclosure process after several years with a lien. Yes, that owner threw a hissy fit about similar violation enforcement wa wa wah...However, those have NOTHING to do with failure to pay your dues/assessments.

I say tell them to sue you. That is perfectly fine. Just send us the paperwork. 9 out 10 times they won't sue. Plus if they actually do file, just counter-sue which is less expensive. The HOA will need an attorney to represent them in court of course because they are a corporation. However, don't worry about crossing a bridge if the bridge isn't even built yet...

A little known secret... A countersuit usually doesn't cost money to file. It's actually the RESPONSE to a filed lawsuit brought against the defendant. When the lawsuit paperwork is delivered there should be a RESPONSE area to fill out. This is to acknowledge the papers were delivered/reviewed and a chance to respond to the allegations. The case usually goes faster and is won due to failure to respond to the lawsuit. It's best to put something there.

A lawyer is ONLY needed when APPEARING in court. They may come in useful of course as "council" to get advice from. However, responses to lawsuits or even lifting/filing a lien a lawyer isn't always necessary. Most people don't know how the legal system works and would prefer to hire a professional. Which is an excellent idea in general. I use lawyers as "Tools" to get the legal stuff done that has to be done. Otherwise, they can stay at the bottom of the ocean with the other feeders... (Lawyer joke...)

The counter-suit can be for about anything as well as long as there is DOCUMENTED PROOF. It doesn't necessarily have to be in the same "vane" as the lawsuit brought. They may sue for not enforcing violations. The HOA can counter-sue for NOT paying dues owed if they aren't pursuing the LIEN process. The HOA could also counter-sue for LEGAL fees associated with defending themselves against a frivolous lawsuit. Legal fees DO have to be requested to be granted. Not always are they recoverable unless a court dictates it as so. Alot of frivolous lawsuits the suer finds out the hardway they just paid for BOTH sides of the case...

I am NOT a lawyer but did take a few courses here and there. Plus I learned from experience as I was involved in almost every conceivable legal situation a HOA can be involved in. Had 3 lawyers working for me at one time! So I learned ALOT from trying to AVOID paying outrageous amounts of money in legal fees. Which can add up quickly and result in nothing...

Two separate issues here: 1)homeowner not making dues payments and 2) homeowner claims HOA is not enforcing the rules.

File your lien for #1.

Make him prove #2.

He is not able to connect the two issues.

The ONLY way suing your HOA actually does work is if it is in CLASS ACTION form. Otherwise it's a lose lose deal for BOTH sides. You have to factor in what the lawsuit is for. Someone suing for NOT enforcing violations is swimming upstream without a paddle. What financial damages are incurred and what will make the HOA WHOLE? That is what the court looks at. Simply NOT enforcing rules on violators unequally is a FACTOR in a lawsuit but NOT the justification of one.

The HOA should have an insurance policy in place protecting it from acts of their BOD or protecting their property. So why sue when you can simply make an insurance claim? If your kid slips and falls into the pool due to a BOD member leaving a Cleaning net out to trip over the recourse would ultimately go to the HOA's insurance provider. They have a CAP on what is paid out overall. What a homeowner MAY sue for is whatever amount is OVER that CAP amount. Unless there is wording otherwise in the policy or law.

IF I sued the HOA for my kid slipping in the pool for 100,000... The HOA's insurance provider would pay the CAP of 80K. Plus they may cancel or raise the HOA's insurance. Thus putting the HOA at risk of paying higher premiums or worst yet having NO insurance at all. This increase would be passed onto ALL the homeowners. The owners may then have to raise dues or have a special assessment to cover the additional costs.

The second part of this scenerio... You still have about 20K left to sue for. The HOA would have to hire a lawyer to defend themselves in court. This could cost up to 5K in legal fees. (Low estimate). This is JUST to respond to the lawsuit in court. IF your awarded the 20K and your legal fees that may be 25K owed to you. You have to ADD on the loss of the HOA's 5K into this figure. That is now 30K in losses.

Let's say you have 100 owners. The HOA's budget can't afford to pay out this large amount. The HOA would then have to do a "Special Assessment". EVERY owner would be responsible for their equal amount. That would be about $300 to 350 depending on if they choose to cover any non-payers. a piece. You included unless ruled by the court otherwise. The HOA would have to dedicate this special assessment money to the judgement.

You also have to factor in if you are SOOO mad at the HOA for this accident you REFUSE to pay your dues or even the special assessment. You haven't been paying your dues until it goes to court or the court ordered you to pay the special assessment. This means the HOA NOW has a court case AGAINST YOU. This gives them the leverage to LIEN you for the non-payment of dues or even foreclose. The HOA can ADD interest, late charges, legal fees, and any special assessments to what you owe. They may even have to do this to other owners who refused to pay dues/special assessments. All this time while NOT receiving money in. The more people owe the HOA the MORE money is spent to collect. Thus the HOA being funded ONLY by it's members FOR it's members enters a vicious circle that is nearly impossible to climb out of...

People do NOT get out of paying their dues due to death. If there is or isn't a will, the property will go through PROBATE court. This is where the assets are divided or sold off. Yes, your lawyer was WRONG in advising NOT placing a lien on the property. Most likely due to the fact that filing a lien doesn't take a lawyer in most cases. They are free or little cost. However, you can add the legal cost of paying a lawyer to the lien if you use one.

Our HOA had a habit of "forgiving" a month's worths of dues in case of owner death. This is touching for sure but considering it takes on average 6 months to go to Probate court. That means 6 months plus late fees of non-payment of dues. Forgiving the 1 month meant 1 month dues PLUS late fees missed. Plus that amount can't be part of the LIEN because it was considered "forgiven". This short changes the HOA.

It may sound cruel and heartless to continue to charge a member after their death but once it hits probate ALL debtors are considered. Does it sound so heartless that the utility, credit card companies, or mortgage company is standing in line as well to get paid? Why wouldn't the HOA need to be in that congo line?

There's no reason for a suit. The owner's already have the power to make changes without a lawsuit. Look at your documentation. All it take is a MAJORITY of votes from the owners to make changes. A special meeting can be called to discuss and make changes.

People forget in a HOA the power is in THEIR hands. It's that RIGHT TO VOTE instead of the RIGHT TO SUE that should prevail. Sounds like the owners need to educate themselve on what a HOA is and how it runs. Once that is established maybe a bit more action will be taken on their part to participate.

There is NO "They or Them" in a HOA. It is "YOU and your NEIGHBORS". A HOA is ONLY funded by it's members FOR it's members. A majority of either homeowners or elected board members make/enforce the rules of a HOA. A HOA is not only a small government but a corporation. The documentation of a HOA not only provides guidelines on how to run the HOA it also provides information on how to make changes/dissolve a HOA.

My suggestion for your HOA... Have a special meeting just to READ and REVIEW the CC&R's and other documentation. Everyone get on the SAME page and EDUCATE yourself on how to best resolve your issues TOGETHER. If need be hire a lawyer to help explain any wording. You may even take the oportunity to UPDATE the documentation and remove/add rules the owners want to live with.

This seems like a situation where things have gotten out of control and things need to be reeled back in.

Kathy,

If your CC&R's permit individual owners to enforce the CC&R's by filing a lawsuit (and most seem to do so), then the HOA has no liability for non-enforcement. The BOD has a great deal of discretion about what battles to fight. I cannot imagine a court finding that the HOA can be compelled to take an action that the owner himself can take. Your deadbeat owner may file a countersuit against your HOA but he will not win as the court will find that his beef is with other owners.

Like most others on this site, I am not an attorney. Unlike most others, I do have some 35+ years of experience representing myself in every level of both state and federal courts. Some wins, some losses, and a lot of draws. Most states recognize your CC&R's as a contract and most provide for the winning party in a contract dispute to recover their court costs and attorneys' fees.

I highly recommend consulting with an attorney before filing any lawsuits. Many attorneys will decline to represent a party who has filed his own lawsuit and then finds that he does not know what to do next.