HOA Assets or Lack Of!!!

Started by JimK10 • 9 replies • 1362 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

JimK10 (Florida)
Posts: 8

Posted:

I belong to a very small HOA in the state of Florida(Sunnyside Mobile Park Zephyrhills)There are approx. 60 members(mobile home owners)in our association. We do not own any parcels of land, we all rent our lots from the park owner. The question I have is this: in the event that our association was sued and found at fault, what assets or monies can we be sued for? I sit on the board(newly appointed) and this question has come up. Speaking to the directors,we do not have any HOA insurance and it has been disclosed that our HOA never has.Can someone help me with this question. Thank You

TimB4 (Tennessee)
Posts: 21,059

Posted:

I am not an attorney and I do not work in the legal profession. Additionally, I am not well versed on mobile home park associations. This is my understanding (which may or may not be correct):

Typically, you aren't sued for assets. You are sued for a perceived or actual wrong. If the court sides against you and awards a judgement that the Association does not have, the following could occur:

1) Insurance would pay (if you have no insurance, this is not an option)

2) A special assessment would be imposed to pay the judgement. If the special assessment isn't paid, the Association can take the steps authorized by your governing documents and/or applicable state laws to collect the assessment.

3) The Association can declare bankruptcy and see what the court does.

4) If you are not incorporated, the individual who was awarded the judgement may be able to go after individual members for their personal assets until the judgment is satisfied.

My suggestions:

a) make sure the association is incorporated as this can protect the members.
b) Get liability and D&O insurance coverage for the Association.

JimK10 (Florida)
Posts: 8

Posted:

Thanks Tim for your response. We are incorporated as a HOA but defiantly do not have insurance. The feeling here is that if we are sued and found to be in the wrong the only thing that can be taken from us is our bank account which is about 3K or so. Not sure if this is the right approach or am I beating a dead horse here?

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Jim,

Get your HOA board to purchase some decent liability insurance. That's really the only thing to discuss since you're living in an HOA community.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Liability insurance will protect the members from a special assessment if someone is injured, brings legal action and wins.

Directors and Officers Insurance (D&O) protects the Directors and Officers of the Association if they are found personally liable for anything. Typically this insurance kicks in when someone brings legal action against a Director (or all Directors) vs. against the Association. Without this insurance, the injured party can go after YOUR personal assets.

Crime Insurance acts as the Associations fidelity bond and covers issues of embezzlement by Directors, Officers or employees. Without this insurance, often required by the governing documents or State laws, the Association would have to eat the loss or try and recapture some of the embezzled funds by bringing legal action against the embezzler.

Per FL 723.079, if applicable: "An association shall use its best efforts to obtain and maintain adequate insurance to protect the association and the park property upon purchase of the mobile home park. A copy of each policy of insurance in effect shall be made available for inspection by owners at reasonable times." What is deemed best efforts will likely be decided by a court if something happens that insurance, if you had it, would have covered and a member brings legal action against each Director for failing to obtain coverage.

Obviously the decision is that of the Board and the membership. Just be willing to deal with any consequences of the decision.

Hope this helps,

Tim

LarryB13 (Arizona)
Posts: 4,099

Posted:

Jim,

Seek out a legal opinion before going off the deep end.

Your association apparently owns nothing and controls nothing. This would seem to be a pretty good limitation on liability for things such as accidents or personal injuries.

I have long been of the opinion that an insurance policy is a magnet for hungry lawyers looking for their next meal. If there is no ready source of cash most lawyers have little incentive to pursue a case.

I have some serious doubts as to whether members could be compelled by a court to pay a special assessment to pay a judgment against the association.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Since someone else owns the park, and people rent the land from that person, what purpose does your HOA serve?

JohnB26 (South Carolina)
Posts: 1,569

Posted:

to negotiate with the landlord as a group

JimK10 (Florida)
Posts: 8

Posted:

We do have a structure set up to meet with the park owner on a regular basis to discuss any issues that arise. This has been working well. As a group we put on many activities that generate some funds that allow us to continue with other activities. We also follow Florida Statue 723.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jim

I expect the owner (as in the owner) could kick you all to the side of the road when he wants to.

Nice that you all have a cordial relationship, but do not push it.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here