Insurance covered Assessment payback members?

Hi Everyone

In the Association loss of the truck suit, they settled to pay defendants Attorney fees. So the Board Assessed the members for the settlement. The old board put in a claim to be reimbursed the assessment and now that I have straightened it out we may be getting that money back from the Insurance company. My question is should that money go back to the members? I think if we try and keep it would require a vote of the members to say where that money goes. I think it should go back to the members and reflect that so there is no confusion in the books. Then we need to assess the members for the foundation work that needs to be done. I think letting the members vote on the Association keeping the money and subtracting it from the total of the new assessment is the right thing to do or would it be better to give it back and assess the new one in full?

Thanks,
Guy

I agree the money should go back to the membership. Special assessments should be used for only a specific purpose. I believe in some states, they cannot be used for anything other than what they were collected for.

I see no problem with issuing a credit to the members, especially if you know they will owe that amount within the next year for the new special assessment or regular assessments. Sure, it's cleaner to write everyone a check and then send them a bill, but as long as the credit is recorded properly, there should be no confusion. You could ask your bookkeeper or accountant if they have a preference.

The money should go back to the HOA and not individual owners. The HOA is made up of the individual owners. Sounds like your HOA suffered some damages because of this lawsuit. That insurance claim money should be working like how a court works. It's to make one whole or back to original condition. It is NEVER to profit. So my questions are how is this even happening in the first place to get the money back from the insurance if they had to pay out?

I am not sure if this is how claims work... Doesn't make sense to me somehow. If the HOA settled for 4K and then did a special assessment for that 4K... How is it that a claim on the insurance can be filed? If anything, the 4K should have come from the insurance company to pay the person whom was settled with. The HOA should never have done the special assessment in the first place.

Usually a lawsuit like this the insurance company handles and then the settlement is handled like an insurance claim. So I am very much confused how a board member is seeking claim money from the insurance company to pay the HOA? It is the HOA and NOT the individual owners. It isn't even individual board members. If anything, it was a liability issue of the board member for acting irresponsible for causing damage to the HOA in the form of a lawsuit.

So even if the HOA gets this "windfall" of a claim, it should go back into the HOA's budget. It's purpose is to make the HOA whole since it spent the 4K in damages. Damages they would not have had to pay if they had not been in this lawsuit. It's filling in a hole created by the lawsuit damages. It's NOT a profit, which could be returned back as a return special assessment monies.

I still don't see how this is "Income" for the HOA. I don't think it falls that way. A HOA is to only be funded by dues. Late fees, fines, and interest would be something akin to profit. It would not be income. They basically work like speeding tickets for the HOA. The police/city doesn't make a profit by issuing tickets. It's punitive damages one is paying.

Maybe I am still missing something here... If the membership paid the amount AND the insurance paid a 4K settlement, then shouldn't the person who received the extra 4K not pay it back? It was a 4k settlement NOT a 8K one... Just saying. One is to be made "whole". The "whole" in this case was the agreement for the 4k. So that other 4K shouldn't have gone out. If so, then the person who got that money owes the membership or the insurance company.

I had to evict a tenant who owed me 3K in rent. The court allowed me to collect a motorcycle. That motorcycle was worth 5K. When I was sell that motorcycle, I was allowed to keep the 3K but anything else above that had to go back to him. I was only allowed the 3K of it. The other part was considered "profit" which the owner was entitled to.

I think the money should go back to the insurance company. Which will pay off in dividends later. Why? Because HOA insurance is extremely expensive, hard to find, and drop you like a bad penny. I would not pursue the claim from the insurance company. Don't think it should be claimed in the first place. The money has already been replaced. Why mess with the Mob?

Think need to break it down to them what could happen taking the money. Not only are you risking higher insurance rate or being dropped but taxation on that money. That's not going to be the full 4K when all is said and done. Plus the money has already been replaced. There is no need for the money as you are a non-profit. This money really isn't destined for each separate pocket. It's destined to be paid back to the entire HOA budget. Which one does not reimburse back individually.

Hi Let

This is a new board the old board resigned but one of those had to stay on because no one else wanted on the board. It was me and one other person that stepped up and that wouldn't make a proper board which could put us into receivership status. I don't think D&O covers a settlement when the board brought the lawsuit. But there is an assessment clause that may cover the settlement. I'm the new President and trying to put this Association back on the tracks along with the other person that stepped up but the third person is from the old board and is covering up things to protect the old board. I ask questions on how things were done and won't get an answer. Like, I asked her when there was an issue with common area damage on my unit where were the meetings and minutes to show the decision of the board [vote] not to do anything and she won't give an answer if they ever existed.

Thanks,
Guy

Thanks, Augustin that's good to know.I'll need to ask if that's the same in Ohio.

Guy