Unpaid bill

The HOA hired an individual to do some work on our well house (DNR)required they do not have the money to pay the bill can this individual file a lein against the HOA ? If a member pays this and is not reimbursed by the HOA can they file a lein ? The pres. knew at the time there was no money to pay this.

BB5

I expect you understand that if the HOA does not have the money to pay the person they hired, then this HOA has a bigger problem then one unpaid, unhappy worker.

I suggest the root of the problem must be addressed ASAP.

Sure, the company could file a lein against the HOA or against every individual property. But its more likely they will simply sue your HOA and let the judge force your HOA to pay which will mean a special assessment for every owner.

Could a lein be filed against the officers who hired someone when they knew there was no money to pay them. Isn't this a breach of "fiduciary duty" ?

No the work was done on the water system-wellhouse. The current officers took all of the reserves and general funds to pay for a capital improvement (that's a whole different story)we only have one meeting per year so no one really knows what goes on. There is already a lawsuit filed over something else and it is my understanding it could affect the sale of property the same as with a lein.

Its bigger than that. Most of the time a mortgage company will not approve your loan if your HOA/condo is currently being sued. They dont want to risk the new owner getting a special assessment, not being able to pay it and defaulting on the loan.

I am a bit confused here. You say they didn't disclose any information before raising the dues but then you state they did it as a way to provide a "cushion". Seems to me they did reveal some financial information and the purpose of the raise in dues. The financials are not enough to have any cushion. That's what I got from that.

Why do you keep insisting on a lien as the method of resolution? A lien is a judgement just like a lawsuit would be. The difference is that a lien is usually held on property that prevents it from being sold until it is paid off. A lawsuit judgement is more monetary and not tied anything solid. I don't think a lien is the way this situation should be pursued. It's more of a lawsuit type not a lien situation.

Just put the property up for sale. Each situation is different. You can't assign the reasons your property doesn't sell just on the HOA issue. There's too many other housing issues out there that makes a house/property difficult to sell now a days. Atleast try and find out what you issues are if you ever get an offer. Work from there...

BB5,

You know that I am not an attorney and I do not work within the legal profession. As others have said, you can file a legal action against anyone for anything. Winning that legal action is another issue.

Most individuals who serve on an Associations Board are unpaid volunteers. As a volunteer, some States limit their liability. Basically if all they did was make a bad decision the court considers it a non-issue. If the Board members are being paid, the court may hold them to a higher standard.

If a Director, Officer or employee is served with legal papers, the Associations D&O insurance should cover the legal expenses, costs and any settlements up to the amount set in the insurance PROVIDING the individuals did not knowingly break any laws. However, if a Director brings the legal action against another Director (Officer,etc.) then most D&O policies will not cover that type of action.

Since most Associations won't file a claim with the D&O insurance immediately, the Association will most likely incur legal costs with any action brought against it. These costs will be paid for by the members (including the person who started the legal action). Sometimes the costs are covered by the existing budget, sometimes a special assessment is needed. In my opinion the Association should not use the Reserve Funds to cover legal expenses.

In the corporate world, I would expect that most actions against a Board of Directors is listed under breach of fiduciary duty. If your considering such an action (and I recommend trying to work it out prior to such action is considered) then you should seek out an attorney who specializes in corporate law.

Going back to your original question about filing a lien, If I was the workman, if the Association didn't own a clubhouse, pool, etc. I would file a lien on the property of every member who belongs to the Association. Of course, that might be more expensive than the cost of the work and, if the Association is incorporated, might not be possible (as becoming incorporated may indemnify the members - check your State laws). A simpler option, in my opinion, would be to return to the well house and take back the parts and materials used to do the job.

If a member paid the worker for the work with the approval of the Board, the member would probably have to go to small claims court and get a judgement prior to filing a lien or using other avenues to collect the judgement. Every State is different so check your State laws and consult with an attorney. Of course, it would be helpful to the member if the "loan" was written out and signed by the President. If that didn't happen, hopefully it's in the minutes that the payment was accepted by the Board as a loan. If that didn't happen, the court might consider it a gift vs. a loan (as the details for a court case are in the documentation).

As others have posted, if your Association can't pay it's bills that they contracted for there are some major issues that need to be addressed.

Hope this helps,

Tim

To answer your question yes a lawsuit can be filed against the officers...I hope you have D&O insurance. If they acted maliciously with the intent to not pay there could be issues...however, no one on here is an attorney and my suggestion is if this is a serious issue then you consult one.

Only one meeting per year the board does not hold meetings in between. Even with the increase in dues there is no money left it's called deficit spending !!!! Thank you all for the suggestions.