What's the threshold for suing your HOA?

Started by JoK2 • 46 replies • 2857 views

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JoK2 (California)
Posts: 198

Posted:

At what point do you roll over as a Board member and allow something to happen instead of taking it to court?

At what point to you roll over as a Member and allow something to happen instead of taking on the fight, whether for yourself or for the entire HOA?

At what point does the Board go to the community to ask their opinions etc?

I have heard of two cases where at the end of the day, it cost the HOA itself over 70K to fight an owner who clearly ignored the documents, and at the end of the day, he only had to build a breezeway to become "compliant".

Another most recent post was that to avoid paying $400 they've spent $5K.

What would you do if you were faced with this as Board? If you ignore it, your not fulfilling your duty, if you fight it, you are spending other peoples money to do so, to a point where a loan has to be taken out to pay for the fight.

I am not trying to rehash the arguments themselves, I am asking how to resolve this exact issue, not the why's etc. Thanks.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JoK2 on 02/17/2014 6:45 AM
At what point do you roll over as a Board member and allow something to happen instead of taking it to court?

Excellent question. The Board, in my opinion, doesn't always have that option.

Regardless of what the Board member may think is the best option, they are duty bound to comply with applicable laws and existing governing documents. Sometimes, the governing documents won't allow for other any other options. Sometimes it does, (like being required to file a lien but not being required to foreclose). It will depend on the language contained in the Governing documents and applicable laws.

As I've said before, A Board should try to do what is ethical. Unfortunately, what is considered ethical to some may not always legal and a Board must do what they are legally obligated to do.

A Board can certainly usually find compromises for situations. For example, our Association has on record for one house that painted their property the wrong color an agreement that the house must return to the approved color when repainted or the property is sold, whichever is first.

Another example: We have often waived all charges if a delinquent account is brought current by a certain date.

Another example: We have often assessed a charge for non-compliance but offered to waive the charge if the issue was brought into compliance by a certain date. (this has been done a lot as sometimes certain individuals simply want to test a Boards resolve)

JonD1
Posts: 2,350

Posted:

As every property, situation, and parties involved are different there would be no one size Fits all.

And documents and state laws thrown in makes each case unique.

Hopefully you have parties capable of acting in an honest way in an attempt to do what's best for the community and owners interests. That line gets quite fuzzy depending on which side of it you find yourself.

In some cases legal action becomes a weapon not a tool. Depends on the intention and motivation of those involved.

SheliaH (Indiana)
Posts: 6,964

Posted:

Regarding questions #1 and #2 – it depends on the issue, so there really is no exact answer. There are some things that do require flexibility, others aren’t worth the fuss and still others require the Board to step in.

For example, our association, like many others, requires homeowners to get permission from the board to make exterior changes BEFORE the work is done. If a change is made without permission, the Board should notify the homeowner and request for an architectural change request form to be submitted.

When I served on the board and this issue came up, I would consider (1) if the change included the common area and to what extent and (2) was the change necessary to improve or maintain the function of the unit. For example, replacement windows require board approval, but as long as the person didn’t so something like install a bay window when there wasn’t one before, I could live with the new windows, provided the person submitted an ACR so we’d have it in the Association records.

If the homeowner ignored the request, it may be enough to simply make a note in the homeowner’s file and inform new homeowners of that unit that he/she has an unapproved whatever – and as the current homeowner, he/she will be responsible for maintaining it or bring it into compliance. In fact, I think a notice of unapproved changes should be part of the information the seller should provide to a new buyer (or the HOA can do it when it sends a new homeowner packet). The new homeowner would know where the Board stood and if it’s worth going after the buyer.

As a member, my primary concern is knowing where and how assessments are being spent, the background behind board decisions and what is being done to ensure everyone pays his/her fair share of assessments. If I don’t get a copy of the budget, don’t know when or where meetings are being held so I can listen to the proceedings or a copy of complete and accurate minutes, that bothers me more than finding out why homeowner A’s request for a treehouse was approved, but homeowner B’s request was not.

At what point does the Board go to the community to ask their opinions? I think the board should ask homeowners to let them know how they feel about various issues at any time (that’s why meeting agendas should have a resident forum and people can always write letters or send emails). Homeowner input is required if a special assessment or significant jump in assessments may be warranted, or if parts of the Bylaws or CCRs need to be amended.

This is when full disclosure on the issues is critical - explain the rationale behind the proposal and why the board is making a recommendation. The board should listen to all opinions and then make a decision, explaining if any changes were made upon getting homeowner input.

Special assessments and amending governing documents require homeowner approval anyway, so the best you can do is present the information and let the homeowners decide. If they vote against the board’s recommendation, the board will have to accept the decision and the homeowners will have to live with the consequences, good or bad.

So it’s a matter of picking your battles and making sure everything’s documented and you followed your procedures. If I have to go as far as to sue someone, I want my case to be a slam dunk in my favor. The homeowner can sue if he/she wants to, but I’d rather my side be based on specific information as opposed to some owners who pull stuff out of their ass thinking it’s ice cream and everyone will love it.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't think the HOA should ever use the court system to enforce their rules. They have another stronger method they can do. That is give the violator a warning. If they ignore it, then they can send them notice the HOA will repair the issue and send them the bill. That bill will be with interest and probably at the highest bidder possible. If the owner still refuses, then the HOA can then fix the issue, send the owner the bill, wait 30 days, and then lien for the unpaid amount.

As for going onto "private property" IF the property is considered "Common" it is NOT private property. The HOA's purpose is to maintain common property. Some may argue the whole "permissions" issue of entering the property. That aspect is up to EACH INDIVIDUAL HOA to decide if they feel it is an issue or not to get permission. I can't tell you because I do NOT know every detail of every property law in every state of the union. This may be the area of which the HOA does need to go to court to get permission to do. Which would then be the actual lawsuit to file and not the one for the owner to repair.

You have to have a clear definition of what you want to do IF your HOA does decide to go to court. The court can ONLY make you "whole". So it can only award you the money/damages spent to repair an item back to close to original condition. Plus your HOA should have the right to fine. It just needs to have that defined and the amounts published for each violation. You most likely can not foreclose for fines and liens are not typically the basis of fines. However, there are some states that one can "work around" to possibly make it where a lien can be for a fine. However, that would take some creative accounting and some legal advice. I don't advocate that approach either.

The threshold for a lawsuit is already set by your insurance company. A million dollar coverage plan usually pays aroun 80K. Look at your coverage to see if you went to court the max amount of pay out. It is in there. It's just NOT the million dollars you may think it is. Which is typical of most insurance companies if you look at the fine print.

Former HOA President

GeoM (Missouri)
Posts: 28

Posted:

Tim makes an excellent point: "they [Boards or members-at-large] are duty bound to comply with applicable laws and existing governing documents. Sometimes, the governing documents won't allow for other any other options."

Of course, communication would be the first line of mediation for either side. However, when ignored, even ridiculed by the opposing side, let me just ask, what length of time should one allow before proceeding over that "threshold"?

If it weren't so precedent-setting, in the first case, perhaps the HOA could have cut its losses by offering to build the breezeway for the owner....just kidding. If it cost the HOA $70K, how much did the suit cost the owner? Where a BOD is challenging a non-compliant owner, I liked Tim's attempts of mediation, even if it means waiting a few years for the sale of a property to be brought into conformity. However, even then it may be impossible to avoid a lawsuit if other owners discover the leniency and feel the discrimination is suit-worthy.

In case #2, factually, the document states for assessments an amount of '$xxx and the basis on which to assess', but which goes on to say that members may amend this document "provided, however, that no right to change the proportion of the assessment rate may be given." Sounds pretty legal to me.

Why should that BOD be allowed to continue overcharging 600 residents in order to provide duplicitous services that are much more efficiently and effectively done by the city when its highest governing document does not give it that control? That BOD is fighting to maintain a status quo it gave to itself years ago. In that case all members will eventually benefit, but at the mercy of unscrupulous directors at the helm who have erred in acknowledging their documents or their fiduciary duty, both in budget-setting and deciding to litigate rather than merely agreeing to now follow the document.

I hope this has not "rehashed the issue" but the question was asked, "What's the threshold?" It can hardly be responded to without some understanding of why one would decide thus.

RichardP13 (California)
Posts: 1,767

Posted:

A few on this site verbally go after individuals who go after their own HOA. Other times when a poster has said their HOA went after them, the response was, you should have shut and paid the fine or complied with the stupid Board request.

There was a case recently where a HOA went after a homeowner for displaying a Obama political sign during the 2008 Presidential elections. Apparently the sign was just a little too big according to the rules of association. The association ended up on the losing end and had attorney fees totaling between $300K-$400K. If memory serves me correctly, the HOA was in Virginia. How many homeowners were aware their hard earned money was lining the pockets of attorneys. Who's decision was it to proceed? The HOA or the attorneys, who would benefit the most. All they had to do was wait until the election was over. 6 weeks tops. My understanding is they may or have had to sell the historic town square to pay the legal bill. An insurance company wouldn't pay this bill.

We had a case in our HOA where the association went after a homeowner in a purely homeowner to homeowner lawsuit. Didn't get permission as they were required and spent $200K in legal fees. When questioned about the expense, they said multiple times, "liens and foreclosures, but wouldn't give out the financials. This case never made national headlines and I must say that the vast majority of HOA vs. homeowners fall below the radar.

Someone here mentioned there are "just over ten thousand volunteers in HOA's. Their math is a little off. With 324,000 HOA, with a average board size of four, there should be at least 1.3M board members. The reality is, going forward 90% of new construction will be located in HOA's, not because of developers, but because of local municipalities. We have HOA's running amuck with individuals having no clue how to run an HOA. The one's I worry the most about are ones that live in townhomes and especially attached condos. With unethical lawyers and management companies, and less than eager volunteers, well, GOD SAVE THE QUEEN.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I say there are two thinks to look at.

One is ethics/rights.

The second is a benefits versus cost analysis.

Often an association needs to defend its ethics/rights even if costly.

RichardP13 (California)
Posts: 1,767

Posted:

Quote:

Posted By JohnC46 on 02/17/2014 1:13 PM
I say there are two thinks to look at.

One is ethics/rights.

The second is a benefits versus cost analysis.

Often an association needs to defend its ethics/rights even if costly.

I am not sure how an association can defend its position over 4 inches.

JoK2 (California)
Posts: 198

Posted:

Thank you for the insight, I feel that I agree with everyone for the most part. Perhaps the "threshold" I am in search of is not a
1 + 2 = 3 issue.

Perhaps the documents should state that after a certain amount of money that has been or is projected to be reached, a special meeting would need to be called, for an update and vote to continue forward.

Unless I am missing something, there is no reason for myself or the rest of the board, to come to a conclusion of any kind until they have communicated in someway of what is going on. Take it to the people and fulfill the duty! lol...

Thanks again!

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RichardP13 on 02/17/2014 11:17 AM

There was a case recently where a HOA went after a homeowner for displaying a Obama political sign during the 2008 Presidential elections. Apparently the sign was just a little too big according to the rules of association. The association ended up on the losing end and had attorney fees totaling between $300K-$400K. If memory serves me correctly, the HOA was in Virginia. How many homeowners were aware their hard earned money was lining the pockets of attorneys. Who's decision was it to proceed? The HOA or the attorneys, who would benefit the most. All they had to do was wait until the election was over. 6 weeks tops. My understanding is they may or have had to sell the historic town square to pay the legal bill. An insurance company wouldn't pay this bill.

This is the Farran case. However, please be aware, both sides were acting like children.

The issue over the sign wasn't about having the sign itself, it was about the size of the sign. Rather then getting a smaller sign from the campaign, the member simply cut the sign in half (both halves now complying with the Association rule). Rather than saying "ha ha you got us on the technicality" and amending the rule, the Board chose to start assessing charges for non-compliance. There were also other issues about unapproved exterior changes (which the Association won) in the case. There were also past personality issues involved between some members of the Board and the homeowner. Of course, those issues typically don't get mentioned in stories about the case.

In my opinion, both sides acted like children. The entire issue could have been resolved if one side or the other would have acted like adults. Instead, and partially because of the lack of membership involvement which could have ousted one party to the issue (the Board) and replaced them with adults, the entire membership suffered. Of course, the issue may have so divided the development that there wasn't enough votes to oust the Board.

Richard, you are correct, the Association had to declare bankruptcy, went under receivership (for the bankruptcy) and lost some of their common area. I haven't checked for awhile, but I suspect sales in that development are still below the normal market for the area.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JoK2 on 02/17/2014 2:43 PM

there is no reason for myself or the rest of the board, to come to a conclusion of any kind until they have communicated in someway of what is going on.

Or you have at least attempted to communicate, not once, but several times.

KarenC15 (Florida)
Posts: 118

Posted:

I think any good business person would seek the option that is financially prudent if it does not adversely impact anyone else in the community. Rules are made to be reviewed and changed with the needs of a community; and some HOA board members are not seeking enough input from those people they represent.

Hatred is contagious, so one should work to avoid it.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By TimB4 on 02/17/2014 3:25 PM

Posted By RichardP13 on 02/17/2014 11:17 AM
There was a case recently where a HOA went after a homeowner for displaying a Obama political sign during the 2008 Presidential elections.

This is the Farran case. However, please be aware, both sides were acting like children.

To justify a lawsuit by an HOA against one of its members there must be absolutely no alternative left. One of the alternatives is always to do nothing. Had the Farrans' HOA done nothing, the sign would have come down after the election and the issue would have been resolved all by itself.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By LarryB13 on 02/17/2014 4:51 PM

Posted By TimB4 on 02/17/2014 3:25 PM

Posted By RichardP13 on 02/17/2014 11:17 AM
There was a case recently where a HOA went after a homeowner for displaying a Obama political sign during the 2008 Presidential elections.

This is the Farran case. However, please be aware, both sides were acting like children.

Benign neglect if often a prudent path.

GeoM (Missouri)
Posts: 28

Posted:

Karen and Larry make the most sense of what I've seen posted.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4 on 02/17/2014 3:25 PM

Posted By RichardP13 on 02/17/2014 11:17 AM

Instead, and partially because of the lack of membership involvement which could have ousted one party to the issue (the Board) and replaced them with adults, the entire membership suffered. Of course, the issue may have so divided the development that there wasn't enough votes to oust the Board.

I find that to be a very solid point. If an owner is acting like a "child" as you say and wants to wage a war over nothing, the board can take a quick and cheap route to dismiss it and let the courts deal with it then and there. If it is not frivolous, the party will have to go the route to take it to the next level and then the board would have to handle it with the best interest of the community in mind.

However, if the owner has a "right" and there is a genuine issue in dispute, the reality is that the board is responsible to ALL OWNERS and should act in within their scope to make sure that their actions/decisions are AT ALL TIMES in the best interest of the corporation. Meaning, if a person is suing because of something that was the responsibility of the HOA/COA, the board should not waste time and money on idiotic defenses and just try to resolve it as quickly as possible. Who does it benefit to spend $500,000 over a $4000 repair. Just fix the damn thing and move on. What is the benefit of the community to fight? Something is broken, damage was done, pay for the damage, fix the problem, get rid of those who failed to act as negligent parties, and move on...

As per the case noted, if the rest of the community wasn't willing to spend $500,000 on a political sign or, if the case may be, a "purple door" that didn't get the "Board's" approval, why should the BOD spend THEIR MONEY to fight the fight? They didn't want the fight. So why are they doing it? Because the board can...

Yet the reality is, if the BOD didn't take up the fight, these same people who wanted to "fight" the fight could take action against the HOA/COA for failing to fight the "purple door" debacle that was DESTROYING the community. They could always sue the COA/HOA for failing to do its duties and put their own money where their mouth is as OWNERS, not board members. They could put their OWN money where their mouth was rather than use the company's money to take on the battle to MAKE the BOD uphold the non-purple door debacle that they feel is worth the BOD fighting for $500K. But see? They wouldn't use their money to rid the community of a purple door, so why would they use other people's money simply because they are on a board? Because they can. But it's not good business to do so.

Of course, as we all know, the discretion and power lies within the Board. If sued for failing to address the "purple door" as a breach of their duty (as if that would rise to such a duty), the board could easily defend themselves with --- in our discretion the defense of -- it's not worth wasting $400K to defend this issue and we are choosing not to do so as per our business judgment rule. And a court would likely entertain their position as a BOARD because a board is NOT BOUND to get wrapped up in legal matters that, even if won, don't serve the best interest of the community. Bankruptcy does not serve the community! A $500,000 loss of common funds over a purple door is not in the best interest of the community! It would be better served to let the "purple door" exist and not bankrupt the community. But Boards don't see it that way...

In truth, how many issues in how many cases should have/could have been resolved and settled without spending the company's money like it belonged to a Monopoly game? Clearly, the lawyers LOVE these disputes (like divorce lawyers love never reaching a settlement and ruining the lives of their clients whose entire lives are embroiled in horror) but it's not for the lawyers to dictate how a board acts.

It's the board who is supposed to act with a responsibility to ALL members and not their own bloated egos simply because they have access to a checkbook that doesn't belong to them.

A board should act more responsibly when taking on these "battles," look to the documents, the laws, realize their mistakes (which they definitely make!), swallow their pride and resolve the issues as adults. But with ego-driven boards and lawyers taking full advantage of the fact that they can make a profit while the suit is pending and again during the bankruptcy of the association, owners are in jeopardy. Jeopardy from a system that doesn't work because those who take on these "battles" have nothing to lose and will lose it all for EVERYONE if they choose to do so.

On a side note, the owners may not be getting the full picture or any picture of what a legal battle is about. So they don't know how to say "enough" since they don't necessarily know the costs involved as it is taking place. If they knew the full story, they'd say -- Why the hell are you using my money to fight this?! And that would be a question that would have to be answered...

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/17/2014 9:50 PM
As per the case noted, if the rest of the community wasn't willing to spend $500,000 on a political sign . . . why should the BOD spend THEIR MONEY to fight the fight? They didn't want the fight. So why are they doing it? Because the board can...

You seem to miss the point of the whole thread. Sometimes, the Board has no choice as the governing documents are written that they are required to enforce the governing documents.

When this is the requirement, the Board fights the fight because they are required to fight the fight.

Quote:

Posted By ChrisA13 on 02/17/2014 9:50 PM

Of course, as we all know, the discretion and power lies within the Board.

Discretion lies with the Board only when the governing documents or statutes allow discretion by using words like "may" or "can". However, words like "shall" or "must" do not allow for discretion and the Board must do what the documents require.

For more info see this thread: Subject: How to read a statute (law)

Quote:

Posted By ChrisA13 on 02/17/2014 9:50 PM

In truth, how many issues in how many cases should have/could have been resolved and settled without spending the company's money like it belonged to a Monopoly game?

That, of course, would depend on the character and maturity of the individuals involved.

Quote:

Posted By ChrisA13 on 02/17/2014 9:50 PM

A board should act more responsibly when taking on these "battles," look to the documents, the laws, realize their mistakes (which they definitely make!), swallow their pride and resolve the issues as adults.

At the same time, the members should also take responsibility, act like adults and comply with the governing documents as they agreed to do. Too often, members want others to comply but they should receive a waiver.

The finger pointing rarely goes in one direction.

Quote:

Posted By ChrisA13 on 02/17/2014 9:50 PM

On a side note, the owners may not be getting the full picture or any picture of what a legal battle is about. So they don't know how to say "enough" since they don't necessarily know the costs involved as it is taking place.

And yet, if the members would do their job of being the checks and balances and attend meetings or review minutes of meetings that they are unable to attend, they would, at the very least, see that expenses to the legal firm went up and should start asking questions about it.

Unfortunately, many members simply don't want to know what is happening within their association. The trash is picked up, the street lights are on and the pool is heated so life is good.

RichardP13 (California)
Posts: 1,767

Posted:

Tim

I can't believe you said the Board has to enforce the governing documents as they are written. First, there is something called a "Business Judgement Rule", which the difference of 4 inches and a couple of weeks account for the actions a Board took and second, it is one thing for it to be in the CCRs, but another when a Board, at some point, created a rule, as was the case in Virginia. Rules have to be fair and reasonable, and the enforcement has to be the same. Common sense has to prevail at some point in time.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RichardP13 on 02/17/2014 11:19 PM
Tim

I can't believe you said the Board has to enforce the governing documents as they are written.

In rereading what I wrote, I suppose that that is what I wrote. It's not exactly what I meant.

Allow me to explain by examples:

If the CC&Rs say members who accounts are delinquent shall have voting privileges suspended until the account is current, the Board can not allow the individual to vote. However, they may accept payment at the meeting to allow the member to bring the account current.

If the Bylaws say that the Board must record a lien for an account that is over x days delinquent. Then, the Board must record the lien. However, they have desecration when to foreclose the lien and may very well have discretion as to when to file the lien (as it will depend on the language)

If the CC&Rs say that the Board must enforce violations of the covenants (vs. only authorize enforcement as most CC&Rs do), then the Board must try to bring violators into compliance. However, they may have descretion on what enforcement procedures they use.

Where the documents say that the Board must do xyz, then the Board must do xyz. However, if the documents are silent on how xyz is to be achieved, there is discretion on how to achieve xyz.

Again, it depends on the language used (which is what I said on my initial post to this thread).

Common sense should always be part of the process.

FrankS10 (Kansas)
Posts: 276

Posted:

Richard,

Thank you, you are spot on IMO. Common Sense must reign supreme at some point.

Others, please quit being so legalese

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4 on 02/17/2014 10:18 PM

You seem to miss the point of the whole thread. Sometimes, the Board has no choice as the governing documents are written that they are required to enforce the governing documents.

No, Tim. Actually, you missed my entire point. And it was completely related to the topic. Boards should not defend that which they need not defend. I understand they have to uphold the contract and fight to defend legal actions brought in which the contract is challenged. But, as I stated very simply, they have the discretion to choose their battles. They are not legally bound to mount monster defenses against all actions. They CAN simply give in if the relief sought is based in common sense.

As per a sign or a purple door, they have a right to fine. If the person sues over the issue, they should look at the costs involved and say... do we, as board, want to spend $500,000 over a sign? They have the right to tell the owners, it is not cost-effective to defend this. They have that discretion. They are NOT legally bound to fight every flag, door, uncut lawn. They, the Board, have other options.

If you look at other fights fought, many people brought suits for access and compensation for charges not permissible in the governing documents. As such, why did they, the Board, even defend their actions? They, the board, should have just given in immediately and resolved the issue based on the contract rather than make all parties go through the process to uphold what was the "law" of the land via the documents.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By RichardP13 on 02/17/2014 11:19 PM
Tim

I can't believe you said the Board has to enforce the governing documents as they are written. First, there is something called a "Business Judgement Rule", which the difference of 4 inches and a couple of weeks account for the actions a Board took and second, it is one thing for it to be in the CCRs, but another when a Board, at some point, created a rule, as was the case in Virginia. Rules have to be fair and reasonable, and the enforcement has to be the same. Common sense has to prevail at some point in time.

Exactly. Boards are given a great deal of room to enforce. Heck, in my case, my board literally violates the rules because they are the only ones in control of anything. Those in power have all the power.

So if they, a board, choose to "go to war" over a sign with the company's money, they are not doing it in the best interest of the community. They are doing it for their egos... encouraged by lawyers who laugh at the stupidity of these volunteers at the golf course on weekends knowing they will rake in tens of thousands of dollars over an issue that need not be an issue.

The board, if it were acting in the best interest of the community and its owners, would look at the costs involved (like they would if it was THEIR OWN MONEY) and say - Hey, we can't go to war over a sign? And we will have to tell the rest of the association why we aren't going to war over a sign.

Did the sign destroy the community? No. Did their battle against the homeowner ruin the community? Yes. Great job, Board of Trustees! You should be so proud... and send a drink over to the table where your lawyer sits at the golf course. He's the one drinking with the lawyers of his "enemies" and the local judges... Can't miss him.

JonD1
Posts: 2,350

Posted:

So now according to some the Board must look at the costs to the community. And how about the party who has brought the suit to begin with? Do they too have to consider the damage their actions have caused ever?

And these words of wisdom coming from someone who has filed a least 4 lawsuits against their own property.

Who according to news articles has come up on the losing end of these lawsuits more often than not.

Someone whose lawsuits have cost the property in excess of $100,000 in legal fees according to claims made by members of the Board.

This including a fight over an easement granted to install a gas pipeline through a portion of the property.Now the owner who brought that suit lost. And then lost the appeal.

This same owner recently sued the JUDGE who had the nerve to rule against her. And that case was very recently dismissed.

But now Chris from Jersey offers instructions on how legal issues should be handled when it seems quite clear she herself has lost all perspective.

Suing a sitting judge was a principled action? Forcing her own property to spend more than $100,000 defending her lawsuits was admirable?

And now refusing to address her own actions I would guess she might still claim those actions are couragous.

Chris demands transparency and openness from her HOA but double talks nonsense when it comes to her own history. The word HYPOCRITE comes to mind.

GeoM (Missouri)
Posts: 28

Posted:

I get the point, and agree with statement provided regarding a BOD backing off when suit seems inevitable if the means do not justify the ends. But how about the second question..."At what point to you roll over as a Member and allow something to happen instead of taking on the fight, whether for yourself or for the entire HOA?

How about a BOD violating the very essence of the Community, i.e., its ROA?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/18/2014 6:45 AM

As per a sign or a purple door, they have a right to fine. If the person sues over the issue, they should look at the costs involved and say... do we, as board, want to spend $500,000 over a sign? They have the right to tell the owners, it is not cost-effective to defend this.

Then one has to ask, since you brought it up:

Chris, what violations are worth the cost of legal action?

JebbyJ (New Jersey)
Posts: 2

Posted:

"what violations are worth the cost of legal action? "

Violations that intrude on our property rights and violations that will cost the community $$ long term.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By JebbyJ on 02/18/2014 11:02 AM
"what violations are worth the cost of legal action? "

Violations that intrude on our property rights and violations that will cost the community $$ long term.

No need to answer, Tim. This is as good an answer as I could give. Not to mention, unlike an owner protecting their investment from a rogue board with no rights other than the courts (or some wild campaign to convince strangers to act to assist you in your fight which is a nice thought but not a requirement under the law and so not a real option), the COA can fine. They have the right to a valid lien. They have powers and options owners do not have. So they can be more flexible in that which they pursue in the courts since they have POWER and options.

In my case, my COA caused a legal case and all expenses related (and all those to come which will be great) by not acting like they should. They had no right, authority or consent to give away parts of my land to a company for its personal use. They did this and stand by this. It's harming my land and since they have "taken an inch" -- they think they can take a mile. I say NO. And I brought the suit. They, if they didn't act with self-serving interests, would NOT fight this and realize that they are not "gods" to with my land as they please. There is no end if I let them get away with this, but THEY can simply cease and desist -- and save the COA the costs involved that are to come by NOT acting within their authority.

They choose to act like dictators, I choose to protect my property. I have that right in the law. They have no right in the law to do what they did. And that will be proven in time...

SteveM9 (Massachusetts)
Posts: 3,699

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If the homeowner ignored the request, it may be enough to simply make a note in the homeowner’s file and inform new homeowners of that unit that he/she has an unapproved whatever – and as the current homeowner, he/she will be responsible for maintaining it or bring it into compliance. In fact, I think a notice of unapproved changes should be part of the information the seller should provide to a new buyer (or the HOA can do it when it sends a new homeowner packet). The new homeowner would know where the Board stood and if it’s worth going after the buyer.

Buyers dont typically look at a HOA's ARCH records before deciding to buy a house. What you should have done is filed that unapproval letter with the registry of deeds so it will come up in a title search. I'm willing to bet that homeowner fixes the problem before someone buys it.

The method you mention above is passive aggressive and does nothing to solve the problem.

RichardP13 (California)
Posts: 1,767

Posted:

Geo

I will use my association as an example to answer the question you raised, "How about a BOD violating the very essence of the Community, i.e., its ROA?"

In the past and even now we have had directors that couldn't read a financial statement. We had directors that would show up to executive session, time and time again, with their board packet UNOPENED. We had others during the general session just texting away. They always did what the management company or attorney told them to do. There are no educational requirement to sit on a board, one that has a $1M annual budget.

6 years ago and out of the blue an incident happened between two next door neighbors. The perceived offended neighbor presented their case to the Board in 5x7 living color glossies. Management went to legal and legal said, neighbor to neighbor dispute, please work it out yourselves. There were other issues which the association took action against the renter, such as issuing a pay or quit to remove the tenant. His parents owned the house and were living in Arizona and had given their son power of attorney. Offended homeowner was not happy and blackmailed the board into pursuing higher legal action. The Board fired the management company and went with one that would pursue the case on their behalf. Same attorney now takes the case. Attorney now had a legitimate partner.

Our average annual legal expense was between $3K-$4K, for 8 years. With the new management company, in three months, $100K. When I inquired, on four separate occasions the board and management lied saying the money was for liens and foreclosures. There is NO discussion or voice in the records to move the case forward. Three weeks ago, and 6 months after we fired the attorney, we finally received the files on the case which were hidden even to the president of the association.

The point in all this, the board in many instances may be highly influenced by either management and/or the attorneys. In our case the management company is the group that turned it around. In an association that is self managed, it could be the person who is the "bully" of the board.

Our association has a huge delinquency problem, from a combination of assessments and water (we are sub-metered and homeowners pay their own bill).We have some serious offenders and for the water, we are going to pull their meters and it will only be re-installed once full payment and connection charges are paid. On assessments, we will foreclose and take possession and rent the unit until the mortgage company forecloses on us. Whatever costs will ultimately be borne by the tenant renting the house out. We are going in with a seamless game plan,as IF IT WAS OUR MONEY individually on the line.

It's always easier to spend someone else's money. As a Board member ask yourself, what would I do IF it was MY money I was sacrificing. Also ask yourself when you have had a serious issue within your community, what steps can be taken to prevent in the future. At the end of the day, you're neighbors for god sake. Use some common sense.

In reading the article from Virginia, I often wonder if the issue was the size of the sign or the name on the sign.

ChrisA13 (New Jersey)
Posts: 120

Posted:

How on point this article is...

http://www.nydailynews.com/new-york/granny-sues-co-op-ordering-buy-pricey-washer-dryer-article-1.1615330

Now, why does this board feel the need to defend this action? Why not just let this lady hook up to what she already has? Why create legal chaos when none is necessary? Unless the board has absolute reasons of safety as to why she cannot replace what she has (and what hasn't harmed the common element in all these years) WHY GO TO COURT?

Because the Board can. It's not their money.

And an insurance company doesn't pick up the tab for this type of litigation. The board simply hires their lawyer and says "sick 'em" with the money they are entrusted to protect and use wisely.

I pray for more suits like this against COA/HOAs. Keep 'em coming until there are laws that force COA/HOAs to ACT IN THE BEST INTEREST OF THE OWNERS.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By KarenC15 on 02/17/2014 3:39 PM
I think any good business person would seek the option that is financially prudent if it does not adversely impact anyone else in the community. Rules are made to be reviewed and changed with the needs of a community; and some HOA board members are not seeking enough input from those people they represent.

Could you please be any more right in your statement?! Never mind. You were 100% right in your statement. Nicely put, Karen.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RichardP13 on 02/18/2014 12:04 PM

In reading the article from Virginia, I often wonder if the issue was the size of the sign or the name on the sign.

Per the court papers, it was the size of the sign.
In fact, per an interview (links provided earlier in this or another thread) the Farrans even said the issue was the size of the sign (as the maximum size of any sign was in the governing docs).

ChrisA13 (New Jersey)
Posts: 120

Posted:

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Posted By TimB4 on 02/17/2014 10:18 PM

And yet, if the members would do their job of being the checks and balances and attend meetings or review minutes of meetings that they are unable to attend, they would, at the very least, see that expenses to the legal firm went up and should start asking questions about it.

Unfortunately, many members simply don't want to know what is happening within their association. The trash is picked up, the street lights are on and the pool is heated so life is good.

"If members would do their job..." They don't have a job. Neither the laws or governing documents force them to do anything. But it does FORCE the BOD to act within its limitations.

Since we know we don't live in a dream world, the idea that "if everybody got together" is a fantasy. And I cannot nor will I wait for others to act in order to protect what I own. The owners' failure to participate combined with the board's failure to perform their LEGALLY OBLIGATED duty does not negate my right to protect my property.

Case law is clear on that.

I have every right to ensure that my property is being protected... even if 99% of the others choose to put their head in the sand. I am not connected with them, I do not have to wait for them to approve of my actions, I did not join a cookie club, this is my home. And I will do what I need to do to take care of my investment.

As I encourage time and time again, take it to the courts. Let the courts see what is taking place and eventually laws will have to be passed to stop the insanity of a board spending $500,000 to get rid of a political sign.

Those board members should be sued personally for acting so negligently with the company's money. The members should sue them personally for acting with such reckless consideration of the company's money.

Remember, the divorcing couple fights to the death while the lawyers get rich and laugh at the golf course. The BOD has to act in the best interest of the owners and not upon the advice of counsel who have a "stake in the game" -- their wallets.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/18/2014 12:36 PM

"If members would do their job..." They don't have a job.

And that, in my opinion, is the very reason for membership apathy.
The belief that the individual members don't have a job to do in the Association.

Quote:

Posted By ChrisA13 on 02/18/2014 12:36 PM

Neither the laws or governing documents force them to do anything.

Members do have a job. They typically just don't want to take the time to do it unless it impacts their wallet.

Granted, the applicable statutes don't require a member to do anything, it just gives them the option.

The governing documents don't require members to do anything beyond paying their assessments and complying with the governing documents.

However, the law of common sense would indicate that a members job is to be the check and balance on the people they elected to make decisions that affect their investment. Common sense would indicate that a party to one side of a contract would want to make sure that the other party is holding up their end of the agreement.

Unfortunately, this doesn't happen. Typically it's less than 40 percent (in my Association it's less than 20 percent) of the members that even take the time to attend the annual meeting. If the apathetic members would actually do their job, they literally could probably rewrite the governing documents on their own.

I'll step off of the soap box now.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4 on 02/18/2014 12:35 PM

Posted By RichardP13 on 02/18/2014 12:04 PM

Per the court papers, it was the size of the sign.
In fact, per an interview (links provided earlier in this or another thread) the Farrans even said the issue was the size of the sign (as the maximum size of any sign was in the governing docs).

See? This is where an owner should file a suit against the board members as individuals and THE LAW FIRM as legal counsel for the COA for bringing forth such a suit that served no purpose and caused so much harm. This would stop in an instant if they thought they'd be held liable for such lunacy.

As it stands, owners have no "big fish" cases of interest to lawyers. They have nothing to win for taking on owners cases about disclosure, purple doors, signs. But if an owner went after the personal assets of the board members who acted in total violation of their duty and sued the law firm who involved themselves in the suit with FULL AWARENESS of the financial harm it was going to cause their "client" (the COA/HOA), these ridiculous legal battles would end.

Imagine if a law firm was held accountable for breaching its duty to its client, the HOA/COA? Not necessarily malpractice, but negligence. Oh, the number of lawyers that would come forth to sue on an owner's behalf would stretch from here to California if they went after the law firms. And the law firms would definitely think twice (or, in some cases, imploded entirely when sued).

After all, the law firm representing the COA/HOA is supposed to watch out for the best interest of the community. And representing their "client" in a manner that is harmful to their "client" seems like grounds for a suit to me. (I'll keep the legalese out of it...)

RichardP13 (California)
Posts: 1,767

Posted:

Quote:

Posted By TimB4 on 02/18/2014 12:35 PM

Posted By RichardP13 on 02/18/2014 12:04 PM

In reading the article from Virginia, I often wonder if the issue was the size of the sign or the name on the sign.

BUT, what was the mindset of the board member?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/18/2014 12:58 PM

Posted By TimB4 on 02/18/2014 12:35 PM
Per the court papers, it was the size of the sign.
In fact, per an interview (links provided earlier in this or another thread) the Farrans even said the issue was the size of the sign (as the maximum size of any sign was in the governing docs).

Chris, please take a moment to actually read the court case (see links provided in various threads).

The case was not about the rule on the size of the sign (although that started the issue). The case was not about what was on the sign. The actual case was if the Association had the authority to impose monetary damages for violating the size of the sign rule.

The rule itself concerning the size of the sign (other than being the catalysis for the fines) was not challenged.

The Bankruptcy was caused by the ruling of the court that the Association had to pay their own legal fees and (since the Farrans won part (not all, but part) of their case, a share of the Farrans legal expenses.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RichardP13 on 02/18/2014 1:21 PM

BUT, what was the mindset of the board member?

From listening to the Farran's interview (which I believe they were very honest at taking some of the blame), I believe the mindset was simply personality conflicts as there had been disputes in the past.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/18/2014 12:58 PM

After all, the law firm representing the COA/HOA is supposed to watch out for the best interest of the community.

No they aren't. They are to offer advice (preferably giving all the options and likely outcome of each option) and then, if it's not violating any law or court procedure, proceed (to the best of their ability) as the client instructs or not take the case.

If you had an attorney advice you to drop the case for xyz reasons, but you felt you were right you can either find a new attorney or instruct that attorney to continue the fight. If the attorney was so instructed, the attorney can then either drop you as a client or continue the fight as you instructed.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4

Chris, please take a moment to actually read the court case (see links provided in various threads).

The case was not about the rule on the size of the sign (although that started the issue). The case was not about what was on the sign. The actual case was if the Association had the authority to impose monetary damages for violating the size of the sign rule.

Please don't assume that I haven't, much like I don't assume that anyone else commenting on it did/did not read it as well. I'm simply using what people are posting to highlight my points that an issue of a sign or a "purple door" is a dumb reason for a board to act.

With this said, I did reach the court's ruling and I am aware that the issue of the enforcement of fines when no such contract exists. I also see how immediate the CAI's response was to make sure that their lawyers got their "clients" in line to make sure they noted all their fees so that they have grounds upon which to take their legal action.

Regardless, if any of the case involved the issue of the size of a sign, then my argument as to the stupidity of the board in pursuing the matter stands.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/18/2014 2:09 PM

Please don't assume that I haven't,

I'm sorry. Your comments were leading me to believe that you had only read the comments others have posted and not the actual basis for those comments.

Quote:

Posted By ChrisA13 on 02/18/2014 2:09 PM

Regardless, if any of the case involved the issue of the size of a sign, then my argument as to the stupidity of the board in pursuing the matter stands.

Ok.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4 on 02/18/2014 1:43 PM

Posted By ChrisA13 on 02/18/2014 12:58 PM

After all, the law firm representing the COA/HOA is supposed to watch out for the best interest of the community.

Clearly we are going to agree to disagree. Fact, you were wrong when you stated I had a fiduciary duty to my family. That is not in the law. Fact, you were wrong when you said owners/members have a job as members of HOA/COA. That's your opinion, not the law. (Although, it would be nice if people got involved.) Fact, the NJ RPC and other guidelines providing for their conduct towards their client is to "act in the best interest." In that attorneys for corporations do more than provide legal advice (they collect debts, record amendments, assist in drafting documents), they are not simply there to "offer" advice. They actually are hired to perform a job, not simply be there as a point of reference.

As such, a lawyer has a duty to advise those acting on behalf of his client (the Board) when they are harming the client (the corporation) and putting it at risk by their actions. They have a duty to make sure that the conduct of others isn't adverse to their "client," the corporation. If I hired an attorney, he would not be able to make sweetheart deals with someone seeking to "harm" me while "offering" advice to me. They are there to protect me and my interests... and that includes acting in a manner to address the harmful conduct of others.

As a further example, if I hired an attorney to close on my home, it would be his duty to read the contract and pick out claims/demands that are adverse to me and STOP IT by advising me that these things were harmful to me. Only then do I have the choice to say, "It's cool, let it go."

But in a COA/HOA, the lawyers deal with the board and they don't tell the board, "Hey, what you're doing is hurting my REAL CLIENT which is the COA and therefore you need to stop or I need to remove myself from this situation because you are adversely harming my client, the corporation."

They are not there just to "offer" advice. They are hired as legal representatives for the corporation. And just because the corporation doesn't have a heartbeat, it still needs to be protected -- even if it is from their own board.

We can agree to disagree, but no one would hire an attorney for their advice. It is for performance as well. And the performance of the attorney for the corporation is to ensure that the corporation is protected at all times. And once the board is acting adversely to the corporation's best interest, the lawyer cannot act.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4 on 02/18/2014 1:43 PM

Posted By ChrisA13 on 02/18/2014 12:58 PM

If the attorney was so instructed, the attorney can then either drop you as a client or continue the fight as you instructed.

Going back to the point I made about the duty of a corporation's retained counsel, a law firm/lawyer should not take on a case that is adverse to the corporation simply because the board chooses to pursue it. He should remove himself as counsel if he sees that representing the action would be adverse to his client -- the corporation. The board is not the corporation and has no right to put the association in harm's way. A lawyer should -- if he is acting as he should -- ensure that the corporation is protected at all times, even if it from those who have hired him to act for the corporation.

At all times, the corporation is the client. At all times, money via maintenance fees goes to protect the corporation via the attorney's retained. At NO TIME should an owner pay to let a rogue board conspire with the attorney's they hire to harm the association and an unethical attorney who does so is failing in his duty to the client -- the corporation.

The corporation is the client.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisA13 on 02/18/2014 2:18 PM

Fact, you were wrong when you stated I had a fiduciary duty to my family. That is not in the law.

You are correct, there is nothing in the law about that.

It's an ethical duty. As we know what is legal is not always ethical. However, what is ethical is typically the right thing to do.

Quote:

Posted By ChrisA13 on 02/18/2014 2:18 PM

Fact, you were wrong when you said owners/members have a job as members of HOA/COA. That's your opinion, not the law.

You are again correct, as I had agreed with you earlier. There is nothing in the law that requires a member to actually participate. I said that it was the law of common sense. However, Common Sense is not actual law.

Common sense is something we all have but not everyone chooses to use.

What is legal is not always based in common sense.

Quote:

Posted By ChrisA13 on 02/18/2014 2:18 PM

Fact, the NJ RPC and other guidelines providing for their conduct towards their client is to "act in the best interest." In that attorneys for corporations do more than provide legal advice (they collect debts, record amendments, assist in drafting documents), they are not simply there to "offer" advice. They actually are hired to perform a job, not simply be there as a point of reference.

The job would be outlined in the contract. Typically, Associations don't have a corporate (i.e. company) attorney. They hire an attorney for a specific purpose as this is the most cost effective for the Association.

Quote:

Posted By ChrisA13 on 02/18/2014 2:18 PM

Clearly we are going to agree to disagree.

Clearly.

ChrisA13 (New Jersey)
Posts: 120

Posted:

Quote:

Posted By TimB4 on 02/18/2014 2:41 PM

The job would be outlined in the contract. Typically, Associations don't have a corporate (i.e. company) attorney. They hire an attorney for a specific purpose as this is the most cost effective for the Association.

In NJ, a corporation cannot act in a court of law without an attorney representing them. As per the governing documents, there is nothing in those or in the law that specifies what a retained attorney can do. They are retained and do not appear to be retained for specific purposes. They are just there. Always.

In my COA, they are definitely not hired for specific tasks. They are on retainer and available to the board as the board wants to use them (at the cost to us all). And,. despite being required by law, they are involved in everything, debt collection, liens, amendments, recording of amendments, and -- of course -- offering legal advice. They are there, like the smelly dumpsters on the street. Always present. (Yes, I used the word "dumpster" for a reason.)

TimB4 (Tennessee)
Posts: 21,059

Posted:

Well, I defer to your knowledge of NJ laws.

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