9 Common Legal Actions Against HOAs and What to Do
As with any other organization, homeowners associations are vulnerable to legal action. More often than not, the community members challenge the association. HOAs must familiarize themselves with the most common homeowners association lawsuits to better prepare for any possibilities.
Most HOAs have faced some form of legal action from homeowners or vendors. While some lawsuits are frivolous, others are serious.
Here are the most common homeowner association lawsuits:
1. Misuse of Funds
Homeowners associations handle money used to pay for the community's various expenses. But, where there is money, there is always a risk of theft and fraud.
Sometimes, board members misuse the association's funds. They use HOA money to pay for personal expenses or to pay for expensive dinners exclusively for the board. While the latter isn't technically stealing, it is still considered a misuse of funds since it is not used in the community's best interest.
When this happens, homeowners can sue the HOA or board for breach of fiduciary duty or the law. In more severe cases, the matter can even escalate to HOA litigation.
2. Architectural Request Denials
Another typical HOA lawsuit concerns architectural requests. Generally, homeowners who want to make architectural changes to their homes have to apply to the HOA. The change will be denied if it does not coincide with the association's architectural standards. Disgruntled homeowners who receive such a denial may take legal action to challenge the board's decision.
There are times, however, when the board's decision to deny a change is unfounded. The homeowner's architectural plans may align with the guidelines, and the board rejected the application for personal reasons; therefore, the homeowner can sue the board for not following the association's regulations.
3. Board Action Disagreement
Boards make all sorts of decisions, but not everyone agrees with them. Suing HOA board members out of disagreement is not uncommon. Many homeowners deal with their dislike of the board's findings in this manner. They feel that suing the HOA will stop the dispute. More often than not, such polarizing decisions involve expenditures that homeowners have to pay.
4. Discrimination
Discrimination suits are prevalent in the United States, and homeowners associations are no exception. A disabled person or disabled homeowner may sue the HOA under the Fair Housing Act or the Americans With Disabilities Act, which usually happens when the association fails to make reasonable accommodations for the person.
5. Failure to Comply with a Request
Homeowners sometimes request to see or inspect certain association records, but they can't grant the requests. Some take legal action to force the board to comply when that happens.
As with other lawsuits on this list, homeowners are only sometimes right. In some cases, homeowners will request to inspect sensitive or confidential records, such as a list of delinquent homeowners. In such a scenario, the board's decision to deny the request is reasonable.
6. Failure to Maintain Common Elements
Homeowners associations are responsible for common area maintenance and repairs. Failing to fulfill this responsibility can be grounds for legal action. Homeowners will complain and even sue the HOA when an association fails to maintain or repair a common element or area. The same applies even if a natural disaster causes damage. Insurance may cover some of the expenses, but it is up to the HOA to have contingency funds precisely for such an event.
7. Personal Injury
People have also sued homeowners associations for personal injury, otherwise known as a slip-and-fall lawsuit. Suing an HOA for negligence is one of the more common lawsuits an association can encounter. Based on the neglect theory, the HOA was negligent in its maintenance and caused the person to injure themselves. For example, if the HOA failed to repair the damages to a flight of stairs and someone trips over it, it could be liable for that person's injury.
8. Pet Disputes
When discussing homeowners association lawsuits, pets don't usually come to mind. But surprisingly, homeowners have sued HOAs over pet disputes. This generally happens when a homeowner disagrees with an HOA's rules concerning pets. They sue to change the rules or force the HOA to allow them to be an exception. For instance, a homeowner may want to keep more than three pets even though the HOA has a three-pet limit.
9. Violations
When homeowners violate the community's rules, the HOA may assess a fine against them. While some homeowners settle the fine, others will challenge the violation and sue HOA board members.
When an HOA Loses a Lawsuit
Homeowners associations can lose lawsuits. If an HOA fails a case in a lower court, it can usually file an appeal in a higher court.
Losing a lawsuit has many adverse effects on the association. For one, the association has to give the homeowner what they want. Another downside is that the HOA has to pay all legal fees and may have to cover the cost of the homeowner's legal fees.
The financial burden will be lighter if the HOA has the appropriate insurance coverage. If not, the HOA will have to pay for the costs using its funds, which technically come from the homeowners. The HOA must levy special assessments or increase regular dues to compensate for these funds. Therefore, even though the homeowner wins the lawsuit against the HOA, everyone else has to suffer the financial consequences.
Seeking Legal Counsel
Homeowners association lawsuits happen frequently. Sometimes, the HOA is wrong, and the homeowner has grounds to sue. Other times, the HOA is doing its job, and the homeowner has decided to file a lawsuit to get what they want. Association boards should be prepared for any circumstance.