DawnL6 (South Carolina)
Posts: 226
Posts: 226
Posted:
ARE SC hoa obligated to pay attorney fees of property management company if a crime is involved?
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Who pays attorney fees?
Started by DawnL6 • 11 replies • 237 views
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DeanJ
Posts: 1,786
Posts: 1,786
Posted:
Quote:
Posted By DawnL6 on 10/11/2024 2:25 PM
ARE SC hoa obligated to pay attorney fees of property management company if a crime is involved?
ARE SC hoa obligated to pay attorney fees of property management company if a crime is involved?
No, the HOA is not under any obligation to defend a PM charged with a crime, nor is the HOA obligated to pay attorney fees of a board member charged with a crime.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Another way to get the answer, Dawn, is to read your contract with the MC.
DeanJ
Posts: 1,786
Posts: 1,786
Posted:
Quote:
Posted By KerryL1 on 10/11/2024 5:25 PM
Another way to get the answer, Dawn, is to read your contract with the MC.
Another way to get the answer, Dawn, is to read your contract with the MC.
If you have a PM agreement that say the HOA has to defend a PM charged with a crime, it might be a little late to be reading the agreement,
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
But, Dean, then wouldn't Dawn have her answer?
DeanJ
Posts: 1,786
Posts: 1,786
Posted:
Quote:
Posted By KerryL1 on 10/11/2024 6:50 PM
But, Dean, then wouldn't Dawn have her answer?
But, Dean, then wouldn't Dawn have her answer?
Yes, and her answer might be the HOA agreed to hire a criminal, but most PM agreements have a termination for cause clause.
JohnC46 (South Carolina)
Posts: 14,265
Posts: 14,265
Posted:
Dawn
I doubt an association would have to pay attorney fees for their MC unless the association was in on it. We need more information.
I doubt an association would have to pay attorney fees for their MC unless the association was in on it. We need more information.
CathyA3 (Ohio)
Posts: 6,299
Posts: 6,299
Posted:
Extremely unlikely that the HOA would be able to defend the community manager because of the real or potential conflict of interest.
FWIW, most boards don't knowingly hire crooks. They do, however, frequently hire based on low cost (ie. "keeping assessments low"). Low cost providers are low cost for a reason, and the reason will become apparent after a while. You generally get what you pay for, and you don't get what you don't pay for.
HOA Math 101.
FWIW, most boards don't knowingly hire crooks. They do, however, frequently hire based on low cost (ie. "keeping assessments low"). Low cost providers are low cost for a reason, and the reason will become apparent after a while. You generally get what you pay for, and you don't get what you don't pay for.
HOA Math 101.
MarshallT (New York)
Posts: 414
Posts: 414
Posted:
The contract should cover this issue, but I don't think it's common for HOAs to cover a MC's legal fees. It should have its own coverage for situations like this one.
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Typically, the PM is seen as an agent of the Homeowners Association.
If the crime in question dealt with the PM performing functions as the HOA agent, then yes, the Association would likely have to pay attorney fees.
Keep in mind, this is what D&O insurance is for.
Sometimes, an Association will wait to see the outcome of the case prior to making any payment agreement.
As others have said, read your contract with the PM. Then read your D&O policy.
If you still have questions, contact an attorney to answer them for you, as you are in legal territory and getting info from the net might be fine for this but a decision should be made on actual legal advice. I suspect it would only take an hour of the attorneys time. Cost: $300 or so.
Here is some info: Things Community Managers Should Not Do In SC
If the crime in question dealt with the PM performing functions as the HOA agent, then yes, the Association would likely have to pay attorney fees.
Keep in mind, this is what D&O insurance is for.
Sometimes, an Association will wait to see the outcome of the case prior to making any payment agreement.
As others have said, read your contract with the PM. Then read your D&O policy.
If you still have questions, contact an attorney to answer them for you, as you are in legal territory and getting info from the net might be fine for this but a decision should be made on actual legal advice. I suspect it would only take an hour of the attorneys time. Cost: $300 or so.
Here is some info: Things Community Managers Should Not Do In SC
DeanJ
Posts: 1,786
Posts: 1,786
Posted:
Quote:
Posted By TimB4 on 10/21/2024 1:40 PM
Typically, the PM is seen as an agent of the Homeowners Association.
If the crime in question dealt with the PM performing functions as the HOA agent, then yes, the Association would likely have to pay attorney fees.
Keep in mind, this is what D&O insurance is for.
Sometimes, an Association will wait to see the outcome of the case prior to making any payment agreement.
As others have said, read your contract with the PM. Then read your D&O policy.
If you still have questions, contact an attorney to answer them for you, as you are in legal territory and getting info from the net might be fine for this but a decision should be made on actual legal advice. I suspect it would only take an hour of the attorneys time. Cost: $300 or so.
Here is some info: Things Community Managers Should Not Do In SC
Typically, the PM is seen as an agent of the Homeowners Association.
If the crime in question dealt with the PM performing functions as the HOA agent, then yes, the Association would likely have to pay attorney fees.
Keep in mind, this is what D&O insurance is for.
Sometimes, an Association will wait to see the outcome of the case prior to making any payment agreement.
As others have said, read your contract with the PM. Then read your D&O policy.
If you still have questions, contact an attorney to answer them for you, as you are in legal territory and getting info from the net might be fine for this but a decision should be made on actual legal advice. I suspect it would only take an hour of the attorneys time. Cost: $300 or so.
Here is some info: Things Community Managers Should Not Do In SC
You bring up an interesting point, but I doubt DO insurance is going to extend coverage to a PM where the HOA and board are not defendants and the PM acted in some rogue act.
CathyA3 (Ohio)
Posts: 6,299
Posts: 6,299
Posted:
I think that D&O insurance won't cover the manager unless the manager is actually an employee of the association (less likely) or is an officer (more likely). The former can happen in larger communities, and several years ago we had a poster from NY who said that the manager in his community was also an officer.
An employee who is engaged in financial shenanigans will be covered by fidelity/employee dishonesty insurance. Other misconduct is questionable. In any case, the HOA would have to prove monetary damages, and aside from instances of financial misconduct it could be hard to do so.
Of course, the judge in a case could award attorney's fees to the winning party in a case. But that's going to be dependent on the details of the case and subject to appeal, so it's risky to generalize.
An employee who is engaged in financial shenanigans will be covered by fidelity/employee dishonesty insurance. Other misconduct is questionable. In any case, the HOA would have to prove monetary damages, and aside from instances of financial misconduct it could be hard to do so.
Of course, the judge in a case could award attorney's fees to the winning party in a case. But that's going to be dependent on the details of the case and subject to appeal, so it's risky to generalize.
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