Dispute between 2 homeowners and the HOA is being sued

We have a very small community - 12 homes. There are 2 neighbors who have several ongoing disputes with on another and are using the HOA as their referee. 1 home owner has filed pre suit mediation against us (the HOA) which we have completed. Out of the long list of demands, only 2 items fall under the HOAs responsibility. We have our insurance company involved, which after paying the deductible, should not incur more costs for legal fees; however, we are still shelling out a lot of money for our general counsel to advise on addressing issues between these 2 owners - from privacy, noise, and what legally we should do regarding the enforcement of these 2 items, etc. the problem is that both neighbors have documentation and PE studies done that totally contradict one another. The claim from the owner that served us with pre-suit mediation is regarding a structure this other neighbor built is causing flooding in their yard. There is a lot of proof from professionals that says this is how the grading of yards have always been and it was unknown to this one home owner that recently moved in (and is the one that filed suit). They have proof contradicting these facts. We can hire our own PE to analyze, but the neighbor who already filed has said that if our PE does not agree with theirs, they will go forward with a lawsuit. The other neighbor says if our PE doesn't agree with theirs then they will sue us. If either party does sue us, we would have expenses covered to defend us, but we would have to file suit against the other home owner to bring them in and if we initiate that, insurance does not cover that. Additionally, insurance doesn't pay for damages awarded or attorney's fees if we lost. We have tried to settle just to make this go away and get us out from a very expensive litigation, but the demands are unreasonable - I.e they want the other neighbor to sign a statement admitting it is their fault, which they will never do. We have offered to put in a drain system and bear the cost, but the other neighbor now will not let us put it in on their property without proof that their structure is causing the flooding. These 2 neighbors are video taping each other and posting nasty things on You Tube and is literally a modern day Hatfield/McCoy situation. Our attorney, who has been practicing for 30+ years has said that never in their legal career have they ever seen anything so ridiculous. These neighbors obviously aren't on speaking terms and refuse to mediate with each other or sue each other. They take a CCR and interpret it to best suit their purpose and then say everything is the responsibility of the HOA.

We have a 3 person BOD, but can function with 2 since we have a quorum. 3 BOD members have resigned in the last 3 months due to these ongoing battles between two home owners, 1 of which is constantly sending out emails and letters criticizing the BOD and name calling. I have stepped in as a BOD member in hopes of resolving with 1 other person (so we are sitting at 2) but have found after spending 20+ hours a week on HOA matters with attorneys, no resolution. We have had 2 property management companies resign in the last 4 months as well. It is exhausting and no light at the end of the tunnel other than litigation. Due to our small size, we have no litigation budget and cannot hire a management company because we are spending all of our money on legal fees because of these 2 home owners. Assuming a management company would even take us at this point, we would be paying them plus still general counsel for dealing with these 2 neighbors. Everything is having to go through legal counsel because both owners want the HOA to go after the other one for perceived issues that in many cases, are not even HOA related or in our CCR.

We have not had to do a special assessment yet, but the writing is on the wall that we will have to. We cannot afford litigation, which will run $50K + potentially nor do I or the remaining BOD member have the time to deal with a protracted lawsuit. We are both already missing work to deal with this. No one will step up to the BOD for legitimate reason and these 2 home owners (both used to be on the BOD) have a conflict of interest although I suppose technically they could be on the BOD, but that is a scary prospect and they would have to recuse themselves from this issue anyhow (I think, not sure). We cannot dissolve due to our bylaws and the ownership held by HOA for common areas which cannot be parceled out to each home owner. We have been told if we did this, mortgage lenders could sue the HOA and the BOD personally.

At this point, the only option we have is receivership, which will be very expensive but it is so ugly that no one will step up and both these 2 home owners have said they don't care how much it costs the community or themselves, they both think they will win the ongoing battle. We plan to both resign this coming week at the conclusion of our BOD meeting after advising the community of the situation and potential financial impact (we can only speak high level, no specific details of the issues). We will ask for volunteers but no sane individual would step up after all of the personal attacks which are very public. Myself and the other BOD feel horrible that our entire community is being ripped apart, that either litigation or receivership (or both in parallel) is going to be expensive and people won't be able to afford it, thus liens and perhaps foreclosures, plus it will kill our property values and may affect a potential buyer from even getting a mortgage approved because of this. All because of these 2 homes.

Apologies for the very long post, but we are beside ourselves and are hoping someone out there may have some suggestions or have experienced similar issues and how they dealt with them. We have read every Florida statute we can on this and receivership, but nothing to address this type of situation.

The basis is that the HOA did not enforce the CCRs. Based upon opinion of 3 attorneys involved on behalf of the HOA, this will go to court and likely 2 issues of the many may be ruled against us although damages would be tough to prove.. Anyone can file a law suit. Per our bylaws, you must pursue mediation with the HOA first before filing suit. We are already in pre-suit mediation and next step is lawsuit. The HOA will be named as we cannot resolve the issue in mediation due to reasons specified above. Maybe a judge will throw it out or maybe they won't, but no one will step up to be on the BOD because of how nasty things are. We have 12 homes, 3 have resigned from BOD, 2 more getting ready to resign, 2 have a conflict of interest, 1 is not a home owner and per our bylaws, cannot sit on BOD so that leaves 4 homes that could be on the BOD. None of these folks will step up so we have no BOD so that only leaves receivership. If the lawsuit ends up getting tossed 6 months from now, great. But it's going to be very expensive for everyone until this gets resolved and if it doesn't get thrown out, it will trigger not only a suit against the HOA, but we would then need to file suit against the other home owner involved, they would counter sue, etc.

All of this is not my assumption. This is upon advice of counsel and likely outcome based upon law and a litigation analysis. I am quickly finding that logic and law don't always coincide. And just a word of advice, I see many posts where people say they don't run their HOA according to strict rules - we have been lax and used best judgement, but if you get 1 person that interprets by the book and only the book they will find an attorney to support their position and then whether it turns into a lawsuit or not, you still have to spend time and money to deal with it.

I've been on HOA boards before and if someone told me this would happen, I would have said extremely unlikely. But it has.

Counter sue on their lawsuit. It will save you money and can sue for the damages the HOA is out. You can also remind them of the damage they are doing to ALL the neighbors... Suing your HOA is suing yourself and your neighbors... Which means they will have to pay any special assessments along the way...

Okay, just who was it who told you that if you dissolved the HOA that the mortgage lenders could sue the HOA and the BOD personally? What is the authority (statute or case law) that they relied on?

Just what grounds would a mortgage lender have for suing? Are there contracts between the HOA and any mortgage lenders? From what would the lenders' damages arise and how would they prove them?

Our CCR's say we have to go as far as having the mortgage companies letter of approval for any and all amendments to our CCR's. It was explained to us that they based their willingness to put out money for the home, located in an HOA, and they have to protect their investment.

Perhaps they found that same attorney that advised us!

Leslie,

Although I agree waiting can be good, it can (and apparently has) caused turmoil within the membership resulting in many not wanting to sit on the Board.

With your attorney present I would suggest that the Association call the two sides into a hearing concerning the two items that are the Associations responsibility. At the hearing, listen to both sides. Then say that since there are differing expert opinions (talking about the drainage) on the issue, the Board, if both parties concur, will seek a third expert opinion, paid for by the Association and agreed by all sides that this experts opinion will be the deciding opinion. I'd suggest that you see if the County will provide the expert ahead of time. They may even be willing to do so at no cost.

Have all sides sign an agreement to that condition (that everyone will abide by the third opinion).

If the sides do not agree, then simply state that the Association is unable to resolve this issue at this time and cannot proceed until the two sides concur as to what opinion to go with.

However, the pretrial issue may have complicated this option. Therefore, check with your local attorney first.

Hope this helps,

Tim

I am going to give you some controversial advice... However, have found it works. When things hit the fan simply walk away and do something else for a day. Cancel those meetings. Tell people you can not make it. Don't let this issue revolve and involve your life. Go fishing, play a round of golf, or simply just not do a thing about the issue at all.

I promise you something is going to happen if you do this... Things will evolve and start working out. I won't promise all positive results but I will promise a few hours of peace of mind off the subject. Stepping away on occasion shows that you and you board are NOT going to be manipulated and that your VOLUNTEERS with other things to do.

I applied this to when I was president when things got tough. Simply would take time for myself and leave. Turned off my phone and kept away from the internet. It seems that sometimes when I wasn't around to play "Dictator" people had to work out their own issues.

Now not recommending this to do all the time of course. You still have responsibilities. It's just sometimes to see the way through you have to let the lawyers and time to do their work. Don't be afraid to go to court. Let them sue you. Simply file a countersuit for all the HOA is out. It's cheaper and can save some legal costs that way.

Backing away from the situation for a bit may let you see a different angle. Step back and evaluate what you all want as an end result. Don't focus on the "drama" but the end result. Without a solution to aim for, your just spinning your wheels...

Y'all have eyes.

View the structure and surrounding land during a heavy downpour.

Where is the water from the roof going ?

Does the structure block a natural 'swale' ?

Perhaps the neighbor's yard DOES flood BECAUSE of the structure.

Perhaps the neighbor's yard floods IRREGADLESS of the structure.

Only by actually 'eyeballing' the situation under flooding rains will ANYONE know.

however

If the structure was built w/o approval or contrary to CCRs then the HOA would be liable for damages caused by non-enforcement.

Has anyone actually looked at situation WHILE HEAVY RAINS are happening ?

Best of Luck

Excellent advice. There may be unintended consequences to approving ARB requests and you do the best you can, as laypeople. But it may very well be that the yard is flooding due to the structure and there may be something that can be done to fix the problem, such as regrading or adding landscaping, or installing gutters on the structure. I do not know, I am a layperson. But maybe you should call a contractor who may give you some good solutions or tell you that it has nothing to do with the structure. Attorneys complicate things; you are halfway into the litigation and then your attorney says, 'yes you can do that but no one asked me to research this, would you like me to get started on that research? It will cost you....'

Let it be the battle of the experts... When it rained in my HOA it would send me straight to tears... We had an issue with flash flooding. It would ONLY flood during rain events and then disappear hours later after the rain stopped. Several homes would flood because of this. One time we had some flood 4 feet deep!

In our HOA, the owner owns the house and the lot it sits on. Everything else outside of that, was considered "Common property" that the HOA maintained by mowing/lawncare. There were areas of "Exclusive use" the owner could enjoy by making their own plantings. The HOA could disapprove anything that could cause issue or in violation.

For the 4 foot flooding issue, it fell inline with a city and Corps of Engineers issue we could not get fixed with them. Tried for years. We finally put in some French drain system and a burm to block the water. Took a few attempts to repair but was able to stop the flooding. Plus the people in those homes were able to be declared in a "flood zone" by the EMA so they could add flood insurance to their properties. Alabama you have to be listed in a flood plain for flood insurance.

I also had the issue where a one of our duplexes house flooded on one side due to what the other side did with their landscaping. They put in some plastic curbing. Which then directed the water to the neighbor's house. Plus the neighbor above them did not have gutters on their home. Which is why the water went down to their yard. The HOA could NOT make the owner install gutters and the owner with the plastic would not remove it. The HOA's hands were tied for the most part.

So yes been there where your at... What is the set up of your HOA that makes it responsible for the yard and the drainage issue?

Did this "structure" (it be nice to know what it is) require a building permit? When a building permit is issued, does the issuing agency require any sort of flood review or approval? (They do in my area and I live in the freaking desert.) If there was a permit, was there an inspection during and/or after construction? If there was a building permit issued, why is that agency not a party? Why are the builder and previous owner (who had the work done) not parties? Why is the current owner not a party?

Owner #1 says he would not have flooding if the HOA had not approved the structure but it is also true that he would not have flooding had he not bought the property. He should have known the structure was already there when he looked at the property. Did he have a home inspection before buying? If this issue is so obvious why did he proceed with the purchase? Did the former owner disclose the flooding?

Is there anything in your CC&R's that mandates that the HOA review drainage issues? What is it that your ARB approves? Types of structures? Colors? Style? Dimensions?

I just do not see owner #1 as having much of a chance against your HOA unless your CC&R's mandate that the HOA takes control over drainage & flooding issues.



With all due respect to your attorney, let your insurance company decide how to handle this. They will hire their own lawyer if there is a lawsuit and that lawyer will decide how to handle everything. Bringing in your own PE will not only incur an expense but the results of his expert opinion will be discoverable by the other party. That is, if you have an expert's opinion you must disclose it regardless of what that opinion is. By hiring a PE you might also imply that you have a liability where it now appears that you have none.

"Did this "structure" (it be nice to know what it is) require a building permit? When a building permit is issued, does the issuing agency require any sort of flood review or approval? (They do in my area and I live in the freaking desert.) If there was a permit, was there an inspection during and/or after construction? If there was a building permit issued, why is that agency not a party? Why are the builder and previous owner (who had the work done) not parties? Why is the current owner not a party?"

PRECISELY

I really hope that one of the attorneys suggested this very thing and as well before the whole thing went to mediation. Do your applications for improvement specify the hoA is not responsible for any failures of the HO's part to comply with all local, state and federal ordinances or building codes? This alleviates the HOA being liable for just this issue.

How long ago was this structure built? The statute of limitations would have started running the first time the neighbor's yard flooded. It did not get reset back to zero when the home was sold. If the structure has been there long enough action against it may be barred by the statute.

If I understand correctly, the CC&R's require that an owner with a complaint against the association go to mediation before filing a lawsuit. I assume that this applies only to the association so that there may be other potential parties who were not included in the mediation. I am not a big fan of compulsory mediation as it requires both parties to put on a case at their own expense before going to court. It is unclear to me, also, what issues the mediator thinks the association may be liable for and, of course, no idea how he reached his conclusion.

One reason I recommended against hiring another engineer is that the court may well appoint its own expert.

Agreed! Someone without a stake in the outcome and it would seem that this would be relatively easy to do, petition the court that is. Would they require both parties to agree to the findings I wonder before granting it?

It's Florida. If the ground is sloping one way and you build up the earth to create a level spot on which to build your shed, the change in direction of stormwater drainage and runoff could be significant. Another factor is the footprint under the shed. Previously there were 150 sq. ft. of bare ground doing its part to absorb rainwater. Now there's a slab of concrete there and now there's excess water that has to go somewhere.

"The reason my 6,000-square-foot yard, where my 4,000-square-foot home sits, is flooding because of your 200-square-foot shed."

If you've got a 4,000 sq. ft. home on a 6,000 sq. ft. lot then you've probably got ample resources to hire a good lawyer to fight your battles for you. On a more modest, say, 1,600 sq. ft. home a small shed on a neighbor's property, depending on how and where it's built, could absolutely be a problem. There are places in my HOA where a pile of dirt 10' by 10' in the wrong place would result in water problems for some lots.

Dissolving the HOA might be preferable to receivership, although that could take 90 to 100% of the voting interests to agree. Then you could look at your options to re-form from square one after the Hatfields and McCoys end their feud.

Mark,

The side problem, of nobody wanting to serve while the legal action is going on, is the reason why the original poster has considered receivership. Basically, it's just too much time and energy then they agreed to do and, with such a small community, the feud over the issue has everyone else refusing to serve.

Do nothing. Its an issue between two homeowners, not the HOA.

Piggypacking on what Larry said, Florida certifies its mediators. I think the following rules for certified or court-appointed mediators are relevant:

"Rule 10.310 Self‐Determination
(a) Decision‐making.  Decisions made during a mediation are to be made by the parties. A mediator shall not make substantive decisions for any party. A mediator is responsible for assisting the parties in reaching informed and voluntary decisions while protecting their right of self‐determination."

"Rule 10.370 Advice, Opinions, or Information
(c) Personal or Professional Opinion.  A mediator shall not offer a personal or professional opinion intended to coerce the parties, unduly influence the parties, decide the dispute, or direct a resolution of any issue. Consistent with standards of impartiality and preserving party self‐determination however, a mediator may point out possible outcomes of the case and discuss the merits of a claim or defense. A mediator shall not offer a personal or professional opinion as to how the court in which the case has been filed will resolve the dispute."

The OP's takeaway from the mediation session seems to be that the mediator expressed an opinion about the likelihood of success. Yet, the mediator is mandated by the above rules to avoid expressing such opinions.

Also, Rule 10.310 states "A mediator shall promote awareness by the parties of the interests of persons affected by actual or
potential agreements who are not represented at mediation."

Yet there is no reference in the OP's posting that the mediator said anything about the other HO who was not part of the mediation but was clearly an affected, and some would say a necessary, party to any decision.

I have a real problem with the OP's statements that the complaining HO rejected the HOA's offer because that offer didn't include an admission of guilt from the excluded HO (an admission that the HOA cannot procure), but the excluded HO (who is the only person who could make such an admission) isn't even made part of the negotiations. The whole thing sounds ridiculous to me.

There does seem to be a mess of lawyers on this one. I count five total:
(1) for side A
(1) for side B
(3) for the HOA