ALLEGED HOA FINANCIAL IRREGULARITIES

I served for two 3 year terms as Secretary of my HOA board of directors until my last term expired at the end of 2016. There was a recall of the remaining board members this year for supposed financial irregularities which I am sure did not occur; however, the majority of homeowners apparently believed the door-to-door recall campaign and the remaining board members I served with until the end of 2016 were all replaced at the beginning of 2018.

I just received a letter that I have been scheduled for a private, IN CAMERA interview with the new Association's board of directors and their general counsel to discuss the financial decisions made on certain expenditures and to give me an opportunity to defend some questionable financial and procedural improprieties that they say occurred during my service on the board.

I have refused to participate as I will be out of town. However, I do not see the new board giving up in implicating me.

My question is what authority does the new board have to require me to answer questions for which I may not have a recollection of and wouldn't the new board need to inform me of specific allegations they have have as far as perceived financial irregularities?

Jennifer makes a good point, if you are being accused of wrongdoing as a director, you should contact the association's D&O insurance carrier. I assume it would be the carrier from when you were on the board if has changed since then. If the carrier requires a lawsuit to be filed before they will step in, that would make things trickier.

Under no circumstance would I consent the interview they have requested without an attorney on my side. Since I would rather not spend the money required, I would probably respond that I would not do a live interview, but would consider responding in written form to written questions about my service to the association.

I agree with most of this, except I am more hard line that in no way would I consider answering anything in these circumstances w/o an attorney representing you, period, since it is accusatory in nature, and their attorney will be there. As a former board member, this should be provided by insurance.

-- Did you serve as both a director on the Board and the secretary of the board? Sometimes the Secretary's job is a separate appointment. The Secretary's job is an officer's position.

-- Chances are good that your HOA's governining documents and state statute require indemnification for both officers and directors. Do review your HOA's governing documents to confirm or reject this. It's probably in the Declaration (a.k.a. CC&Rs and similar).

-- One huge exception to the requirement for indemnification is "willful misconduct." E.g. bona fide criminal activity.

-- The HOA's general counsel is legally not on your side. The HOA's general counsel's client is "the HOA," which often means the current Board. Generally, the HOA attorney will do what the board tells him or her to do, all to ensure as many billable hours as possible. That may sound cynical but I feel I have seen this more than once.

-- The letter that was sent to you should have emphasized that you have a right to bring your own attorney. Such notification (that you have a right to bring your attorney) is part of the due process that courts expect of HOAs. If the letter does not say this, then this board is a bunch of clowns out to "get you." They may want to run a kangaroo court. They may use the video footage to unlawfully defame you.

-- I would inform the board to (1) provide you with the questions they wish to ask; and (2) the names and contact information of all insurers for the HOA. Sometimes there is more than one insurer. Like the others said, immediately call the insurers and ask that an attorney be assigned to you.

-- Unfortunately, it's pretty usual for HOA insurers to decline to assign an attorney until an actual lawsuit is filed in state court against a director or officer (or former director or officer). Meanwhile, the HOA board will use member funds to pay their HOA attorney. It costs the board members nothing. Incompetent board members can destroy a HOA by abusing their right to corporate counsel.

-- I would not give claims adjusters any information except. To any query the claims adjuster might have, I would repeated again and again, "Please assign me an attorney." From what I have seen with two HOAs, claims adjusters will try to bully and lie to people. They are not well-educated in the law. One of the first things one of these idiot claims adjusters will say, is: "Give me your personal insurer's contact info. We need to let them know a claim has been filed against you." Refuse to give this info. Repeat again, "Please assign me an attorney."

-- Based on what you say about the Recall campaign, this board may very well twist anything you say into a falsehood. I have seen it happen before. This board will destroy the chances of any of the past board members ever being elected again.

-- Unfortunately serious cases of embezzlement by HOA board members or HOA officers do occur and are pretty common. A new one seems to be reported at the news section of this site about once every few weeks. I can understand a board having concerns. But proceedings that amount to a kangaroo court will get a HOA in trouble. HOA Board members are volunteers not trained to handle serious legal situations in a manner that ensures due process. Instead, often HOA Board members like to think of themselves as being as important as, say, a state district court judge. Do not believe the latter for a minute. There is a good chance this "proceeding" is about HOA Directors' egos.

Best advice yet.

I want to thank everyone who responded. I did consult a Florida lawyer and his opinion was that the new board was just posturing and the new board president wants blood; a fight, and a reaction. The lawyer's advice was to ignore their requests to meet as they have zero legal grounds and the letter was just a scare tactic. As far as due process, my due process is to ignore them.

Bingo.

Keep in mind that many (most) D&O policies do not cover board member v board member issues.