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Started by DawnL6 • 19 replies • 422 views

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DawnL6 (South Carolina)
Posts: 226

Posted:

Bad Board Bad Board,
What ya gonna do when they come for you?
Who is honest enough to say their associations Board of directors being investigated for wrong doings?

DeanJ
Posts: 1,786

Posted:

I have been on 2 separate HOA boards. I am honest enough to say neither board is or was investigated for anything. If either were to be investigated, there would be zero evidence of any wrong doing because penny is accounted for and board has no conflicts of interest with any contractor for the HOAs.

If you evidence of a crime(s) concerning your HOA board, you should call the police and provide your articulable suspicion of a crime(s)

GregoryT1
Posts: 315

Posted:

Hi Dawn,

I have no board. There is no financial issues since we have no money and everything balances. We have other issues but nothing criminal.

Do you have issues in you condo you will like elaborate on as Dean stated?

CathyA3 (Ohio)
Posts: 6,299

Posted:

Since Melissa hasn't been around for a while, I'll go ahead and say it: suing the association is suing yourself and your neighbors.

Also, most CC&Rs that I've seen require the association to carry Directors & Officers insurance, and there may be a separate statement saying that the association indemnifies the board for actions they took while acting in their roles as directors. Note that this would not cover criminal behavior - but it would cover garden variety incompetence. Many boards are jumpy these days because of the turmoil in the insurance market. If premiums hit roof as a result of legal action or the insurer dumps the association altogether, who would pay the price for that? Oh yeah - the homeowners.

Stories about HOA boards being investigated for criminal behavior are pretty uncommon (except for that HOA in Florida which was actually being run by a criminal gang). I think that HOA is now is receivership, by the way. The one thing I'd keep an eye out for is embezzlement and financial misconduct, especially if the association is self-managed (too few eyes on the books, check-writing ability by the board, and homeowners too trusting of their neighbors). This is why many bylaws require an annual audit. An impending audit does tend to keep people honest.

Since the financial records are open to the membership, it's kinda on them if they're not keeping their eyes on what's happening.

And no, the boards in my community have never been investigated even though a few of them have made some bone-headed moves. But bone-headed isn't criminal. Anyway, we're too busy arguing over parking spaces and dog poop.

MarkM19 (Texas)
Posts: 1,459

Posted:

Dawn,
I must commend you on the catchy Subject Line but like so many click bait headlines not much info follows.

I had a HOA board that I joined in California 17 years ago that was allowing the president to get his hands in the cookie jar for multiple contracts. It took me a short time to figure it out and almost 2 years to build the case to get him fired. At the time I thought I had enough evidence to file charges, but my other board members were satisfied just to get him fired.

As Cathy stated in Melissa absence suing your HOA almost never makes sense.

SheliaH (Indiana)
Posts: 6,964

Posted:

She actually responded to an old conversation from 2012 - https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/144992/view/topic/Default.aspx. and gave a cryptic comment as usual. Same thing here.

Since Dawn never seems to ask a straight question about any HOA issue at least I haven't seen one), I can only assume she's venting, which is ok.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By DawnL6 on 09/29/2024 3:14 PM
Bad Board Bad Board,
What ya gonna do when they come for you?
Who is honest enough to say their associations Board of directors being investigated for wrong doings?

Investigated by who?

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By CathyA3 on 09/30/2024 8:05 AM
Since Melissa hasn't been around for a while, I'll go ahead and say it: suing the association is suing yourself and your neighbors.

Also, most CC&Rs that I've seen require the association to carry Directors & Officers insurance, and there may be a separate statement saying that the association indemnifies the board for actions they took while acting in their roles as directors. Note that this would not cover criminal behavior - but it would cover garden variety incompetence. Many boards are jumpy these days because of the turmoil in the insurance market. If premiums hit roof as a result of legal action or the insurer dumps the association altogether, who would pay the price for that? Oh yeah - the homeowners.

Stories about HOA boards being investigated for criminal behavior are pretty uncommon (except for that HOA in Florida which was actually being run by a criminal gang). I think that HOA is now is receivership, by the way. The one thing I'd keep an eye out for is embezzlement and financial misconduct, especially if the association is self-managed (too few eyes on the books, check-writing ability by the board, and homeowners too trusting of their neighbors). This is why many bylaws require an annual audit. An impending audit does tend to keep people honest.

Since the financial records are open to the membership, it's kinda on them if they're not keeping their eyes on what's happening.

And no, the boards in my community have never been investigated even though a few of them have made some bone-headed moves. But bone-headed isn't criminal. Anyway, we're too busy arguing over parking spaces and dog poop.

I suppose if you are in an HOA of 1 you with no DO insurance you are suing yourself. Otherwise you are really suing the insurance company you are paying a small portion to represent the board for a civil tort.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I think that Melissa was referring to the longer term consequences of that legal action: payments to the attorney plus higher insurance premiums (or even loss of coverage if the insurer decides the HOA is too high risk). The homeowners will pay the price for these things in the form of higher assessments. It's why people who sue their associations can end up being the community pariah, which is especially unjust if you consider that the person who filed the lawsuit may have been the victim of some pretty obnoxious behavior (eg. a Fair Housing complaint).

DeanJ
Posts: 1,786

Posted:

I believe many owners who sue an HOA, especially when a group of disgruntled owners pool money for the purpose, become disappointed when they figure out the board isn’t spending a penny of their money an attorney and there are methods to just bleed them dry.

CathyA3 (Ohio)
Posts: 6,299

Posted:

This is the nature of lawsuits. I refer to them as expensive, time-consuming methods of achieving uncertain outcomes. Lawsuits are not slam dunks. People who want to go all-in need to have a serious discussion with a competent and honest lawyer who will explain the chances of their getting what they want. (An honest lawyer will not use the words "sure thing".)

To be clear about something: When homeowners file a lawsuit against the HOA, the HOA *must* respond legally - even if the board and the association attorney believe that the lawsuit has no merit whatsoever and will get tossed out in court. If the HOA does not respond, then the court will find in favor of the plaintiff. And yes, when homeowners file a lawsuit, their assessments will pay the association's attorney. The board is not acting for the benefit of the homeowners, it is acting for the benefit of the association.

This is what Melissa meant when she said that suing the HOA is basically suing yourself. You will be paying your attorney and the HOA's attorney (via assessments). Pick your battles.

TerriS6 (California)
Posts: 3,284

Posted:

I must (again) defend the legitimate stance of members who have the courage to challenge the board in court when all other remedies have been exhausted. Were it not for my small claims remedies, our association would have: NO elections, 4 illegal assessment increases, multiple void invalid illegal liens kept on neighbors’ properties, multiple Open Meeting Act violations, multiple records request violations.

What reasonable person would acquiesce to the board spending tens of thousands of dollars to defend its breaking the law?! To defend its breach of fiduciary duty?! To defend its disloyalty to the association?! Yes, in this case the claims were justified and the board’s unconscionable spending was inexcusable.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I don't think anyone is saying that homeowners shouldn't challenge their boards. But given the costs involved and the potential for negative repercussions, it's important for would-be plaintiffs to be very clear about what could be accomplished and to determine if the potential benefits outweigh the potential risks. The level of outrage prompting the suit is not an accurate gauge of what may happen.

I can pretty much guarantee that any lawsuit which results in a painful increase in assessments will cause the membership to question whether the lawsuit should have been filed in the first place. "You mean my assessments are going up $100 per month because the old board forgot to notice meetings?! Are you sh**ing me??!!"

Pick your battles.

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By CathyA3 on 10/11/2024 1:00 PM
I don't think anyone is saying that homeowners shouldn't challenge their boards. But given the costs involved and the potential for negative repercussions, it's important for would-be plaintiffs to be very clear about what could be accomplished and to determine if the potential benefits outweigh the potential risks. The level of outrage prompting the suit is not an accurate gauge of what may happen.

I can pretty much guarantee that any lawsuit which results in a painful increase in assessments will cause the membership to question whether the lawsuit should have been filed in the first place. "You mean my assessments are going up $100 per month because the old board forgot to notice meetings?! Are you sh**ing me??!!"

Pick your battles.

Well, that didn't happen. But if it had, who would have been responsible?

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By CathyA3 on 10/11/2024 9:23 AM
This is the nature of lawsuits. I refer to them as expensive, time-consuming methods of achieving uncertain outcomes. Lawsuits are not slam dunks. People who want to go all-in need to have a serious discussion with a competent and honest lawyer who will explain the chances of their getting what they want. (An honest lawyer will not use the words "sure thing".)

To be clear about something: When homeowners file a lawsuit against the HOA, the HOA *must* respond legally - even if the board and the association attorney believe that the lawsuit has no merit whatsoever and will get tossed out in court. If the HOA does not respond, then the court will find in favor of the plaintiff. And yes, when homeowners file a lawsuit, their assessments will pay the association's attorney. The board is not acting for the benefit of the homeowners, it is acting for the benefit of the association.

This is what Melissa meant when she said that suing the HOA is basically suing yourself. You will be paying your attorney and the HOA's attorney (via assessments). Pick your battles.

This seems to be a very misunderstood topic on this forum.

If your HOA is sued, the HOA has liability insurance that will pay for the legal defense. The insurer hires and pays an attorney to defend the suit.
If the insurer does not renew the insurance policy, they are still on the hook to defend the HOA’s insurance claim.

The best defense against any lawsuit is to use your HOA attorney for advice, follow your CC&Rs to the letter and don’t discriminate against owners.

CathyA3 (Ohio)
Posts: 6,299

Posted:

And then the insurance premiums go through the roof or the HOA receives a cancellation notice (which happened to one of our regular posters recently).

Use of insurance is not free money.

DeanJ
Posts: 1,786

Posted:

I understand that’s what you believe. HOA lawsuits are really common today and these lawsuits are settled rather inexpensively because they rarely go to deposition and court.

KerryL1 (California)
Posts: 14,550

Posted:

Maybe, true, Dean. can you supply proof?

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By DeanJ on 10/16/2024 5:48 PM
I understand that’s what you believe. HOA lawsuits are really common today and these lawsuits are settled rather inexpensively because they rarely go to deposition and court.

I could look up some examples that might shock you. I attended a meeting a year or two ago where lawyers cited multiple settlements where associations had to pay hundreds of thousands of dollars - let alone attorneys fees. When I have time I will look up and post some of them.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By KerryL1 on 10/16/2024 7:29 PM
Maybe, true, Dean. can you supply proof?

policies

I have been on a board 18 years ago that was sued. The insurance did not increase appreciably the following year. I have also been on a board in a community that has never had a single claim in 18 years. We had a 20% increase this year.

Insurance rates are based on claims across all the insureds. If your HOA is having a lot of claims, your real risk is non renewal.

There are also large variables in state insurance markets. If you are in LA, CA, TX or FL, any claim is likely to result in a non-renewal.

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