Can I sue Board Members of my HOA

Can I sue in Small claims court, each member $10k each?

From Texas: Our home values is $400 up, we have 700 Residents.
Our property entrance wall which were on the books scheduled to be renovated in 2013, is nearly fallen to pieces.

When I questioned the HOA board members, they tell me they're still taking bids. They then say it will cost $200k,
yet we have 4 accounts totaling more than $400K. Why would we have 4 separate checking account?

Our president wrote a provision into a contract that we just uncovered, which states, they don't have to show any bank records after 7 years, we're coming up on year seventh, so year one will soon be hidden and held in secrecy.

Homeowners were billed nearly $6000 for Christmas lights which amounted to three sets of small lights around a light pole and to make matters worse, the vendor was the president of the HOA husband. I have ask for records , receipts, vendor names etc, and I'm still waiting as they have gone silent. Since my request, the president suddenly resigned from the board.

Thanks for listening. I understand suing the HOA would be suing my neighbors, but I want to make these people pay both personal and monetary for their expected criminal activity if possible.

Please Advise,

Lolo, to add to my previous post, you may wish to familiarize yourself with Section 209 of the Texas Property Code. There are sections which address records requests, records retention, and bidding when family members are involved.

If your association has a records request policy, obtain a copy and follow it. Your request can be delayed or denied otherwise.

Please also note the ability of the association to charge for production of records, including reproduction costs and clerical expenses.

Bill. I did request, that told me it would be very expensive to produce all records, vendors and bank statement. I hired an attorney to request all documents, and they haven't replied back. What I didn't mention id their failure to get on to neighbors in regards to the upkeep of their yards.

Personally: This (HOA Sorority) feels like the biggest non-police train robbery around. I will never again live in a HOA.

You just dont understand HOA's.

Front entrance is not your property. It belongs to the HOA to which you are a member of. Your individual property value loss cannot be proven due to lack of front entrance maintenance.



Typically a judge will not reimburse you for these things.



Yep, you can. Do you have a neighbor that has physically damaged your property or caused you loss? Everything you have mentioned previously doesn't count.



Well, thats just your opinion based on nothing.



Embezzlement laws.



Again, just your personal opinion. If its not prohibited in the CCR/Bylaws, its likely good. As for charging too much, although its unethical, its not illegal.

Want to change things? Run for the board. Your neighbors will vote you in.

Lolo,

There is much for you to learn about HOAs.

Perhaps your HOA is not well managed or led ... this simply means you should organize your neighbors to replace the board in order to reestablish order.

If you are unwilling to do this, or your neighbors are unwilling, then you must continue as you are ...or move.

@Steve

Your point) Front entrance is not your property. It belongs to the HOA to which you are a member of. Your individual property value loss cannot be proven due to lack of front entrance maintenance.

**** The front entrance is indeed my property, Our Dues are paying for it, otherwise I would have the city repair it. And you're wrong again, it does effect our value, its the first Visual new potential resident see , and the last one they remember.

@LoloJ, you can sue all of them, but (1) the HOA likely has insurance that would cover claims and (2) the loss to you is small.

The way to go after them would be to file a "derivative suit", usually requiring that you demand that the current board go after them, and if the board doesn't then you can. However, the HOA, not you, would recover damages, for itself.

The transaction with the company affiliated with the spouse of the board president should have been approved as a "related-party transaction", and if it wasn't, it could be set aside and the HOA could demand that the company pay back perhaps part of the contract amount.

As other posters say, though: vote them out of office.

Glad to help. Generally, if you sue a board member for even generally being a moron, you won't win; the "business judgment rule" gives them wide latitude to set rules and run the HOA, even if the board members make dumb decisions and aren't the best.

If you have concerns about a specific thing that the board members did, such as a specific rule or a specific action (such as the contract with the board president's spouse's company), then you might have more chance of success if:

* The board member violated "fiduciary duties", such as by showing loyalty to third parties before loyalty to the HOA and its members, or by doing something that benefited the board member at the expense of the community.

* The action or rule was done in direct violation of the HOA's governing documents or the law.

Even then, if you didn't suffer a material, quantifiable harm (such as financial loss that can be measured), it's tough to win. Please note that small claims court generally can just result in the recovery of monetary damages; small claims court can't give "equitable relief" (i.e., it can't force someone to do something, other than pay monetary damages).

To your credit, if you sue in small claims court, then your own legal fees will be low or nonexistent. When you sue a HOA, the HOA often is covered by insurance, and a vindictive board can just make the case drag on, just to run up your expenses, since the insurer is paying the HOA's expenses. Thus small claims court is a good idea, except that the only thing you can usually recover in small claims court is cash, and you recover cash only if you suffered measurable financial damages.

I'd do a derivative suit against them in small claims court if I were you, focusing on benefits that they gained due to their board service. Damages will be paid to the HOA, not you, but at least it'll show them.

To clarify: if you're going to sue them--and it sounds like you are--then small claims court would be the way to go, and a derivative suit (with damages being paid to the HOA) may have the best likelihood of success.

Suing them yourself, seeking damages paid to you, wouldn't really work well, since if you sue them yourself, the HOA will call its insurer and likely get a free lawyer, and you wouldn't win much of anything.

I'd focus on voting them out office.

Thanks John,

That's exactly what i'll do. My only issue now, they're not turning over records,
but maybe the judge in small claims court can help me out.

Thanks Again, now I have some type of direction and focus.

John,

Thank you Sir,

They've told me, I would have to pay a high cost to have them pull the records. Maybe the courts can reimburse me, If I win. I will figure it out. You've been really helpful.

Hi Augustin, I may not understand the question. Our HOA covenant is the same as others. The issue - they're not turning over vendors names,receipts, etc. I have access the budget records, which is how i was able to view the enormous cost(s). The $5500 spent on Christmas lights and broken wall are only two issues, we easily have 7 other problems that are just as glowing .

No one signs a contract with the HOA to keep their home values. That is impossible. What you are agreeing to is to keep your home and the common area ATTRACTIVE to potential buyers so they will purchase at a good price. Again property VALUES are based on REAL #'s not what you think your house is worth. I give this example all the time: Looked at a house, hated the wallpaper, did not buy the house. Did the house lose it's property value because I hated the wallpaper? No. It lost my interest because did not like how it was upkept/decorated.

If you sue your HOA you sue yourself and your neighbors. That is a FACT. Where do you think the HOA money comes from? Your dues and your neighbors. Stop paying them and you get liened or foreclosed on.

A court can ONLY make one WHOLE. So you have to have had suffered actual damages. Saying you want to sue for 10K is just grabbing an amount out of the air. If your claiming your HOA let your home value go down 10k, then you have to prove that. Which involves selling your house at the 10K loss and testimony that people did not pay home value price due to direct HOA fault. However, once you sell your home... your no longer a HOA member.

I don't think you really know how a HOA works. It is ONLY funded by it's member for it's members. The CC&R's, by-laws, and Article of Incorporation are how the HOA maintains and operates. There is no "They or Them" in a HOA. It is YOU and your neighbors. So you may want to get your nose out of the stories you read and into the reality of how the place operates.

LoloJ, if you sue a HOA, the damages can be paid by the board members personally (in the rare case in which they are personally liable), or by the HOA's insurance carrier (which might result in a higher premium). It's definitely not the case that damages payable by a HOA are only from the HOA's members, even if in many cases they are.

LoloJ- I really wouldn't go into this with the goal of making anyone's life hard. What the goal should be would be to get the HOA and its personnel to follow the law, period. If you go into this with a goal of making others' lives hard, (1) it won't work and (2) doing so may well backfire on you.

I don't know about your state's HOA licenses. In mine, HOAs are corporations and they have certificates of incorporation on file with the state. Those generally aren't rescinded by the state, and if the HOA fails to comply with what are nominal reporting requirements in my state, the HOA can later correct the failure and pay a small fine and be as good as news.

Lolo,
It is clear to me that you are frustrated. I think part of this is due to the fact that no everyone should live in a HOA. The people on the Board were elected by your 700 HOs and they may have picked a bad bunch. As others have mentioned they need to be voted out and replaced with better board members. You mentioned the Pres resigned. How is the vacancy being handled?

Not sure how the Christmas Lights install happened. Do you go to the Board meetings? This should have been on the agenda and I would have expected one or more Board members to ask if this person had the appropriate insurance and license to do this work. Hiring licensed contractors is much more expensive than "Jack of All Trade" types. HOA and Management companies always should avoid these deals. That is the PMs job to keep the board from hiring unlicensed vendors.

I agree with your case on the Front entrance needing to be done quickly. This is obviously an eyesore and reserves you be on hand to repair. You mention that you think they should have 2 million in reserves. Do you know how much monthly from the budget goes into the reserve accounts? They do have other reserve items that get replaced all the time in HOAs. The funds go in monthly and in some cases get spent monthly on repairs. I would ask for a copy of the reserve study. This should be a 20 to 30 page document and should be available by email. If not you can expect to be charged 15 to 20 cents a page for this plus clerical time if they choose to penalize you. Usually reserve studies are mailed to homeowners.

I have gone through the Small Claims process for my last board in Ca. Do not expect it to be very fulfilling. You will likely have about 10 minutes if you are lucky to state your case and more than likely to person who rules on the case has already decided if you will win or lose before you finish.

Thanks Mark....i think i have a pretty good feel on what i need to do. Small claims court.

Such bad and cringe worthy advice. If someone sued us, i would just tell them to send the paperwork. Will see you in court. Never sued once. I do not bow down to idiots who threaten lawsuits without going through the process of HOA documented process. Court does not either...

Your so full of it. HOA are NOT real estate...

John, would you please email me, I have some doc's and finding I'd like to share with you.
[email protected]

Thanks

Not sure where you are in Texas, but here's a link to information about small claims court in Dallas County.

https://www.dallascounty.org/government/jpcourts/3-1/smallclaims.php

If you've decided to take this path, your first consideration should be - "What's the judge's first impression going to be like?" Judge's are busy. A judge will lose patience with you quickly if you are asking the court to dig in and find out what's going on in your HOA. That's not going to happen.

Here are a few pointers for you:

The $10k limit is a limit on your total claim, not the amount you can claim against each of the defendants individually. A judge will blow you out of the water in around 5 seconds for wasting her time on something as ridiculous as bringing a $50k claim against 5 defendants in small claims court. Also, the judge is not going to award you $10k just because it's the maximum possible recovery available in small claims court. You will need to show the court that there was a $10k loss. Nothing you provided so far supports a judgment in your favor in the amount of $10k.

When you make statements like - How do I know that they're not taking the HOA money? - you don't earn any brownie points with the judge. If, instead of saying that there's only $400k in the bank when there should be $2.1m - You actually provide some detail about how you made those calculations, then perhaps some folks on this forum could give you positive feedback or advice on how best to present your claim to a judge. Same is true for your claim that there's enough money in the bank to pay for the wall repair that should have been done in 2013. Yet, you've said nothing about a reserve study which could possibly support your claim or support your HOA's defenses. Talking about money in the bank with no mention of reserve study requirements does not build anyone's confidence in the legitimacy of your claim.

I know that you think that the Pres resigned when you got too close to revealing his embezzling activities. Yet, there could be another explanation that could be more plausible to the judge. Maybe the Pres was just tired of putting up with your allegations.

Sure, there could be some shenanigans going on in your HOA. But putting a whole laundry list of grievances before a judge and saying I should be paid for my loss isn't going to cut it with any judge I've ever heard of. Better for you to identify just a few things, do some further investigation, and show the judge that you've done your homework and aren't wasting her time.

If you don't, you are opening yourself up to the possibility of a counterclaim against you for filing a frivolous lawsuit. Based on the lack of depth in your explanations, I could see that happening.

Finally, I think you will find on this forum that the more details you provide, the better the advice you will get. I'm not for you or against you. I'm just saying that you haven't presented anything close to a compelling argument.

If you look at the link above, a good place for you to start is to gain a reasonable understanding of how the Discovery rules work. If you don't follow what's required, you could lose an opportunity to find out what's actually going on in your HOA.

Best of luck.

I would not have started this post if i didn't have enough disturbing evidence to produce a case. In all due respect, I never asked for most of the (side chair judges) advice, I'm receiving from you guys. There's no cookie cutter decisions for lawsuits. I had a simple question, and that question was answered long ago.

"grind"

Have a great weekend. Everyone.

Melissa Im not sure what part of not interested in what YOU Have to say, that you don't understand. If you just like writing and seeing your own advice. Start your owm blog. Im a business owner where would i find the time, an example need to be made so it doesnt happen here again. Period!