Suing our HOA

No. But I will point out that your CC&Rs probably will require the association to carry D&O insurance. And if you don't carry it, nobody in their right mind will serve on the board, and then hi-ho hi-ho, it's off to receivership you go (where you will get an extremely painful lesson).

The posting rules don't allow naming specific communities or vendors, so full have to go to your local bar association for a referral. On another conversation, you ask if there was an inexpensive option - depending on the issues, there may not be any so you need to decide if going this route is really necessary. You can askthat your legal costs be rewarded to You if you win

Others have asked who you want to sue, so that needs to be answered first. I don't think individual homeowners can file a claim against the D&O insurance anyway - you would file your lawsuit and if you win or there's a settlement, the policy would kick in.

Our D & O is a million.

You go after a corrupt board by holding meetings and talking with every homeowner and voting them out. If you sue and win, they can still continue to be a board member. Loosing a lawsuit does not remove them from office.

See response to Cathy, Shelia.

Thank you Cathy & Sheila for your time and effort to help me!

Sorry I wasn't clear. I would be suing the Board for breech of fiduciary duty, which, theoretically would kick in their D&O insurance, and not risk the burden falling to me and my fellow homeowners.

If there is a better way to accomplish the mission, I'm all for it. Augustin was nice enough to look up and post a link to the NC Statute regarding mediation and I'm not holding my breath, but I'll try that before any litigation.

There seems to be no other way than a successful law suit to deal with a dishonest BOD, and I'm pretty sure the Board knows this and it's probably one of the reason they are so fearless and arrogant. They know that without a law suit, they're basically untouchable.

North Carolina has some of the weakest statutes on HOA's in the country. We have zero reserve requirements. I'd love to know if California's Davis-Sterling Act is helping or hurting HOA's.

A footnote for NC and maybe other states:

If my HOA election last year was a NC city or county election, it would rise to the level of criminal activity, so why isn't our HOA election covered by NC criminal laws? Depending on the offense, North Carolinians have criminal and civil avenues they can pursue, but not HOA's. To me, North Carolina has relegated its 2.6 million HOA members to 2nd class citizens by not applying criminal laws equally.

Thanks again Cathy & Sheila for your help.

I agree with others that breach of fiduciary duty can be hard to prove - not to mention time consuming and expensive as heck, assessments will rise to pay the legal costs of litigation, your insurer may jack up your rates or even dump the association as a client (increasing assessments at a minimum), and you may find yourself the community pariah for bringing all of this financial woe to the community. Oh, and prepare for a counter-suit if you go this route.

The easier and cheaper route by far is to band together with like-minded neighbors and get yourselves elected to the board. Board members serve at the pleasure of the homeowners and can be removed with or without cause. You don't have to prove beyond a reasonable doubt that the current directors are bad actors, although you should be sure of your facts if you want allies among your neighbors.

I confess, I'm getting less and less interested in going after the D&O. I'll be reading the fine print as I was advised. The primary purpose of the whole law suit exercise would be, if we win, to pay for our legal expenses, get injunctive relief for all their lawlessness, and get rid of them.

I'm not including the horrendous job they're doing for us. My understanding is that stupid mistakes, stupid decisions, and lousy management are all covered by what I call the Stupid rule, or the Business Judgement Rule, allowing Boards to be Stupid.

All my evidence has to to with willful wrong doing.

Again, Sheila, I can't begin to thank you and some of the others enough for your experience and guidance. I could spend weeks Googling this stuff and I'd come up with nothing, because it's not there.

If withholding legitimate openings by municipalities, to be voted on, say county commissioner or city council seats, suddenly saying we're not going to fill these seats, would definitely rise to the level of North Carolina's election laws violations, Chapter 163. I've filed criminal complaints with the county DA, State Attorney General, State Elections Board, and the Secretary of State. My responses were anything from none, to it's not our jurisdiction, to denial the statue covers HOA.

The Secretary of State was an amusing adventure. They have a complaint form for violations of 55A, the NC Not for Profit Act. No penalties available, but supposedly they and send out interrogatories to wayward corporations. Our Board refuses to share the names and addresses of fellow homeowners, a clear violation of the Act. After trying for several months, I finally talked with the Counsel for the Secretary of State and she was surprisingly candid. She said the Attorney General had told them not of send out interrogatories. She further said she did not even know how to write the interrogatory, and if she did, it would be 18 months before it was acted on. This was a dual purpose exercise to exhaust all avenues state-wise, regarding our HOA, and to prove a point to myself that North Carolina treats it's 2.6 million HOA owners as second class citizens.

We are a vacation condominium, a second home to most owners, and increasingly, Air B&B investments. This compounds our problem as some owners don't care, others just sell their units when they get mad. Over the last few years we have formed a group just called Concerned Homeowners. We were just about gutted last year by fleeing owners. We're just about back to the magic number, 20% of our 88 units, enough to call for a Special meeting. I'm leaning toward yours and others advice, of rallying owners, by setting up Zoom meeting around April, hopefully on a monthly basis.

My first year on this project, I was startled to find out we have no Special Reserve, have never had a reserve study, and the Board wants us to believe any leftovers from a Special Assessments can be applied to other projects. There is no evidence that that and so many other thing were ever approved by the owners. In a rare moment of honesty, in August of 2020, they quipped in a newsletter that "pay as you go," wasn't working. No kidding! They subscribe to none of the national organizations that support HOA's. From Board to Board, they do the same things they've always done, right or wrong, blame the previous Boards for mismanagement, call it a day, and go home.

The last time any owner inspired items made it on the annual agenda was 2018, when they had to call a Special Meeting to correct stupid mistakes I had pointed out. Since then meetings are tightly controlled allowing 5 minutes for each owner that wants to speak, no agenda items, and they have an armed guard (local police) in the back, to assure a peaceful meeting. I've railed against that too. In my 6 years we've have never had any altercations. Some owners get upset, but never violent. The guard is totally unnecessary and, I believe, designed to intimidate the homeowners.

Somebody got up on the wrong side today....]

Board members are volunteers in a thankless job. Some wear that Volunteer like a chip on their shoulder that elevates them above their fellow homeowners. Some of these use their volunteering as an excuse not to follow the rules and do what they know is right.

You would fit right in with our Board.

For someone who is notorious for spreading false and factually incorrect information and made up sh*t you are simply too much.

Have you considered why the NC Secretary of State is not enforcing the law?

It took over 35 years of adulthood for me to realize that much of the law is not enforced; that there are nowhere near enough public defenders to ensure low income folks get the due process to which they are entitled (so they rot in prison, taking on new addictions, facing rape, and more); that many horrible, tortious situations cannot be addressed because middle class Joe cannot afford an attorney; that the IRS could give a flying fig about enforcing many of its rules, on account of it does not have the budget to do so; that city land use departments should be re-named "City Let-Me-Help-A-Developer-Break-the-Law Departments" (said aiding and abetting of lawbreaking being blessed routinely by their respective city councils); that national parks will fall apart and even burn when there are not enough rangers to keep an eye on things; more.

You call these realities "an amusing adventure."

I call them a part of growing up in the United States.

Thank you for your input, Melissa. Maybe we should agree to disagree? I think I have answered all of you questions and we have covered all of my issues. In the words of my BOB, any further conversation between us is "closed."

If I had to guess why the Sec. of State wouldn't enforce the law, I would say politics.

I didn't see anything in your comment that struck me as untrue. Sad. And as you put it, reality.

What reality? How dare you put that here Augustine! Why next you may say that thinking you are smarter than everyone in the room means no one else is doing their jobs...

You know that could be Augustin. I have heard the whole state government is streched (sp) to the limit!

Wonder if he understands what receivership will do to his wallet, not to mention the oh, so important property values people continue to howl about? Or he's trying to figure out a way to get named receiver so he can do whatever he wants and make money doing it (some people have no shame in how money's made as long as they're the ones who make it).

Maybe someone should find a way to make this guy admit in open court why he wants receivership - it would be interesting to hear how the judge responds to that. Then again, I wonder about some of THEM.......

Good luck to you and your neighbors.