Actions to Take When Your HOA Board is Faced with a Lawsuit

Your HOA is being sued, what do you do? You know that being faced with a lawsuit is a serious matter and absolutely should not be ignored. That being said, there are some important actions you need to take as an HOA board member to avoid setting the homeowners association up for failure and getting yourself in a mess you can’t clean up.

Refrain from Discussing the Lawsuit Publicly

Don’t talk about the lawsuit facing the Association in a public meeting. It’s a private, confidential matter and any conversation about the lawsuit should be discussed in an executive session. You definitely should not discuss it with friends to ask their opinion on the matter or your neighbors in the Association. Tread lightly and be sensitive.

Contact the Association’s attorney and insurance agent

Contact the Association’s attorney as soon as possible. They are the expert and they will be able to evaluate the lawsuit and start guiding you through the process. Also make sure to contact the insurance agent you have a relationship with instead of going directly to the insurance company. This will help speed up the process.

Schedule an executive session 

This is where the board should lay out the situation and discuss what the Association is being sued over and what the suing party is requiring. Make sure your experts are a part of this process so you can ask questions. They can also help you decide what to do and what not to do as a collective HOA board, and help you make a strategy plan.

Depositions and mediation

The best thing you can do is try to settle and figure out the issue. Go in with the mindset that you are not going to get everything you want and be willing to mediate and resolve the problem.

Trial

Most HOA boards want to avoid this because it’s expensive and emotionally taxing.

Common issues HOA boards are sued over

Maybe your HOA board hasn’t been faced with a lawsuit yet, but it’s a good idea to be aware of the most popular issues that lead to lawsuits:

• Enforcement of documents
• Construction defects
• Third party issues, such as two neighbors disagreeing over a design review.

How an HOA manager can help

An HOA manager can help the board when faced with a lawsuit by:

• Guiding the process
• Providing the information that is asked for by the suing party
• Acting as the point of contact

Remember, if your HOA board is being faced with a lawsuit don’t talk about it publicly and seek counsel from your HOA manager and the experts you trust.