Texas HOA Has Added the Expense of a Private Lawsuit to the Ballot

A dozen individuals in our neighborhood individually signed a petition and then sued one neighbor for perceived fence violations. The HOA did not initiate the lawsuit but the attorney fees now appear on the ballot and the HOA expects to increase the homeowners' dues significantly to offset the cost of a lawsuit that was not filed by the HOA. Can the HOA absorb the cost of an outside lawsuit, forcing the expenses on everyone in the neighborhood?

The dozen named plaintiffs included the HOA name when they filed the lawsuit. Prior to the lawsuit, a petition was circulated among the neighbors to garner support for imposing legal action. There were no board or full member meetings held to inform the members or ask the members to vote on having the HOA named in the lawsuit. Now that the legal fees have exceeded $35K, a line item was included on the recent ballot for the attorney fees (covering fees from 2020 and 2021). This is the Board seeking a RETROACTIVE vote on passing on these costs with the expectation that the homeowners foot the bill, including those who did not sign the petition and are not named plaintiffs.

This is not a special assessment. This was certain members hoping that the threat of a lawsuit would make the defendants amend their property. As this was not officially agreed as an HOA action by the members prior to the lawsuit, I view the lawsuit as a separate and personal activity. If the dozen participants win, they can recoup their monies via judgement. If they lose, they each agreed to pursuing the lawsuit and these costs should be borne by the named plaintiffs, not the HOA. Your thoughts are appreciated!

Who authorized the monies to be placed on the ballot?

Being a corporation, the HOA must be represented by legal counsel, and it must have been authorized beforehand. The HOA must be represented separately. The owners, being individuals, can represent themselves, but not a corporation or LLC.

The plaintiffs are SOL if they think the other owners owe them one red cent!

Thanks for responding. We are not suing the HOA. The HOA entered into a lawsuit without ballot consideration or a a vote (or a written announcement of the lawsuit). Without a vote, without this being announced in writing, their existing lawsuit is a private matter. Now that the bills are rolling in, the plaintiffs want to retroactively make this an HOA agenda item for vote (translation: we did not formally consult with the members or vote on proceeding with a lawsuit and now that we are steeped in bills, we'd like to make all homeowner, even those who are not named in the private lawsuit, liable for the costs. Turning a private lawsuit into an HOA matter.

-- Most likely the Board has the legal authority to decide whether the HOA will join a lawsuit as a co-plaintiff. Meaning that most likely, no vote of the owners is needed for the HOA to lawfully join a lawsuit as a co-plaintiff.

-- Respectfully, I think you need to call the clerk for the court where the lawsuit was filed and ask how to get copies of the court filings, learn who the plaintiffs are, et cetera.

The Board "borrowed" money from two homeowners to initiate a lawsuit. It sounds like the HOA or Board was behind this all along.

You're not going to get anyone here denouncing what the Board did was wrong. What you'll get is a atta boy, the Board is within their legal authority to do such things.

This sounds very convoluted. First, I'm not sure why anyone thought it was a good idea to borrow money from owners for legal fees. I also don't understand why they would have a vote of the owners to pay the legal fees. The board should make the decision to sue or not and, once they do, they are committed to paying any legal fees. However, by Texas code, if the HOA is suing for a covenant violation and wins, the defendant has to pay the HOAs legal fees.

That being said, we don't have enough information to have an opinion on whether they should have joined the lawsuit. I know that many HOAs do not have the authority to fine so the only enforcement power they have is a lawsuit.