Litigation against the Board and Notice to the Homeowners

George, my suggestion would be for the Board to get one or more legal opinions and discuss this with their insurance agent. Then if there is the possibility of a large special assessment I would provide information to the homeowners and call a special members meeting to explain and get their input.

Yes. and especially if they might be liable for potential sizable assessments from losing and the cost of lawsuits. It is the board's responsibility to avoid these costly lawsuits, but with attorneys - who get paid irregardless - "advising" them to go all the way, it is the members who are the ultimate losers. They deserve to know up front before final action is taken. You can be sure the board will not be regarded fondly if they keep quiet about such a pending expense and it becomes a reality.

George,
As a Board member and having to go into a litigation against 2 homeowners and then of course, they countersued the Board and the association, I can tell you that if this has not gotten way to far out of hand, back up for a minute and try to get it settled before it gets into court. It is NOT FUN and will put the association in a negative spot with everyone.

I'd like to have just some vague information please. Is this litigation strictly against the Board for some grevious error or misconduct? Is it against an interpretation of how the Board is following your Docs? Not doing their duty? That is why the Board should have D.& O. insurance if it is for fraud or misconduct. Let us know a little more without getting into the attorney stuff.

Resident should be informed as soon as they have met initially with the attorney because they(members) will find out sooner than you want them to. You must be open with them. How do the residents in general feel. Too many unknowns right now.

George,
Boy, this will need alot of legal to straighten out. But, please try to explain why you supposidly were required to pay dues to a neighboring association according to their bylaws? Do you have that in your documents someplace? I would be interested in the wording as to why your association is responsible to pay them assessments.

And who in your association decided not to pay them and why?

Apparently there is a common expense(or at least they claim) and I get a feeling that this Dam comes in to the picture.

As it has gotten this far, there is nothing to do but wait for the courts to straighten it out. But all of the residents should be informed of everything except when and what you are in discussions with your attorney. He also should tell you what information the membership should be told and aware of.

Both were built by different developers. Our association was built and formed first, so our docs do not refer to them at all. Their docs have an article that extends membership to our association by way of an initial contribution to theirs. You see, we have common land that is owned by our association that joins their common land. So, either they wanted to be neighborly, or they wanted someone to share responsibility... Seems the latter since their docs call for our association to be responsible for xx times the dues and assessments that they levy on a single of their homeowners. (yes that was "xx" - meaning double-digits). Their association is small; ours is much larger. We also apparently, have a disproportionate number of membership votes too, when compared to the contribution they claim we are responsible for. Further, we are allowed no access to their lake; it is prohibited specifically in their by-laws. Perhaps it is time to challenge their claims, but what a horrible process to look forward to. And, I agree that stopping all payment was not a good move, it only got them worked up.

Anyway, they claim that somewhere back in time we made that initial contribution, hence their current demands. Beyond that, I'm not sure of many details surrounding the validity of their case. I'm ashamed to say that as a long time homeowner, I have not been active. I suppose this is all too often the root of many association problems; meaning a lack of homeowner participation. I'm sure I am not alone, but that is only an excuse and nothing more.

Our Board has made all recent decisions with regard to their demands, until they filed suit, then our lawyer stepped in to represent, or so I suspect. However, I can't say whether she (our lawyer) was involved or not in the initial dispute before it got to the courts; maybe she was.

It seems time will tell. I'll have to inquire about any insurance we may have, I recall that I've seen such a line item on our annual budgets. I'll also have to ask about their board's responsibility towards maintenance, but I suppose neglect to plan ahead for such an expense with some reserve funds, or their decision to wait and make assessments when needed, is their choice.

Regardless, no resolution soon, I'm sure, as with any litigation

A good real estate lawyer will tell the Board what to do (settle, counter-sue, etc.)

In the meantime, by all means let the Membership know that the Assoiation is being sued. Then tell them exactly what the Board has voted to do about it (under the advice of a lawyer) and how it is going to be paid for. Call a special meeting, if necessary, to lay out all the facts. No secrets!!

Board members are not lawyers and should not try to figure this out without the help of an attorney, especially if you go to court. Members should not blame the Board, either, for what it must do to protect the Association.