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The Top Seven Reasons HOAs Get Sued
Smart HOA boards need to know the answers to two questions: What are the most common reasons associations get sued? And how do they head off those costly cases? Here are answers.
Do This, Get Sued
"The good news is that we don't see as many cases against associations as you think," says Bob Diamond, a partner at the law firm Reed Smith in Falls Church, Va., who helped write the Washington, D.C., condo act in 1976 and worked on the Uniform Condo Act, which 24 states have adopted. "To say, 'Everybody's likely to get sued' isn't accurate. We have more cases in our other litigation practices than we have against associations. The difference between this and a corporate-type lawsuit is that this involves people's homes, which makes people very emotional. And they're much harder to resolve than disputes between two businesspeople."
With that in mind, what are the most common lawsuits HOAs face? "That's easy," says Diamond. "It's all the issues of everyday living or money."
Other experts agree and offer this summary of the most frequent claims made against associations.
1. Upkeep failures. "The top reason is usually the failure of the association to either maintain, repair, or replace common elements or units after a casualty a natural event," says Randy Opotowsky, a partner at The Steeg Law Firm in New Orleans, who represents 15-20 associations at any given time. "The obligation in Louisiana is for the association to maintain the common areas and sometimes, notwithstanding what insurance may or may not cover, depending on the type of damage or loss, it may also be responsible for repairing units. If your roof has become worn out and started to leak and caused damage to a unit, under most Louisiana condo docs and the state's condo act, the association is really responsible for repairs to the unit. That's as opposed to a hurricane that may cause damage to both the common area and units."
2. Denial of plans. "We see suits in which you have a homeowner who wanted to do something architecturally and got turned down," says Diamond. "And he sues over that."
3. Election disputes. "We do a lot of recalls and a lot of election disputes," says Alessandra Stivelman, an associate attorney who specializes in community association law at Eisinger Brown Lewis Frankel & Chaiet in Hollywood, Fla. "Those are really time-consuming, and associations hate them. In addition, a lot of issues we deal with when associations get sued are for failure to keep up with the common elements and failure to comply with a records request or inspection."
4. Pursuing violations. "We've had disputes arising out of breaches of the rules, regulations, and bylaws and how the association assesses fines and collects delinquencies," says Opotowsky. "There's a dispute over attorneys' fees and late charges, and that's where we run into unit owner claims."
5. Restricting board actions. "There are also lawsuits in which owners say, 'I don't like what the board's doing, so I'll try to stop it,'" says Diamond. "That frequently involves capital expenditures or additional services the board has decided to adopt, but home owners don't want to pay for it."
6. Discrimination. "Another area of litigation not unique to HOAs or condos but that's frequent," says Diamond, "is a disabled or handicapped person suing for violations of the Americans with Disabilities Act or the Fair Housing Act, for failing to make a reasonable accommodation like installing ramps or for housing discrimination."
How You Can Avoid Suits
Can you head off lawsuits? In most, but not all cases, yes.
"Sometimes associations haven't done anything wrong," says Stivelman. "Sometimes things are unclear, like the governing documents may be unclear as to who's responsible. The association may not have known how to proceed and didn't come to their lawyer for advice. Then they came to us only after they got a demand letter from unit owner. Other times, associations aren't aware of the law.
"Also, and I hate to say it, associations know the law and don't want to follow it," adds Stivelman. "I have a lot of those. Maybe there's a request for a reasonable accommodation with pet disputes or handicap access. Right now, we're dealing with an occupancy restriction. There's a complaint, we're trying to conciliate the matter with the state's Human Rights Department. A unit owner tried to rent a one-bedroom unit to a man, his fiancé, and their infant.
"The association has a maximum-two-person-per-bedroom rule," explains Stivelman. "The U.S. Department of Housing and Urban Development has a key memo that doesn't specifically say what's reasonable but offers suggestions and recommendations. But it has an example of when a child is involved and when restrictions on infants may be considered cause for discrimination as opposed to when there's a teenager. HUD suggests considering the size of unit, not the number of occupants. But the association wanted to enforce its rule. The board sees it as not discriminating but enforcing its documents uniformly. We're negotiating.
"The point is that a lot of times boards tell us, 'Let the government tell me I'm doing something wrong. As a board member, my job is to enforce the association's rules and regulations. Unless someone tells me I can't, I'm going to do that rather than run the risk of encountering unit owners saying we're not enforcing the rules,'" says Stivelman.
Is that a smart way to proceed? "That depends," explains Stivelman. "It depends on whether something's unclear or whether it's helpful for a judge to say, 'You can't do this,' and that provides guidance for the future."
Diamond's advice is to know proceed with caution. "Follow proper procedures and get proper advice," he says. "And most of all, don't forget you're an HOA, not a large corporation. So be reasonable. If somebody needs something you can accommodate, cooperate.
"With every association I start representing, the first question you ask the board is, 'What kind of community do you want to be?'" explains Diamond. "Do you want to say, 'Let's let people live their lives' and you don't give people a hard time unless somebody files a complaint saying their neighbor's making them miserable? Or do you want to be the type where there's strict enforcement, and you have board members and staff running around looking for violations?
"A lot of associations are misled by counsel who say, 'If you don't enforce this, it'll be a waiver, and you won't be able to enforce it in future, and it'll be the end of your ability to enforce your covenants,'" contends Diamond. "That's not right. Boards have discretion. As long as they're not acting arbitrarily and capriciously and they look at the issue carefully, they can say, 'In this case, it makes sense to make an exception.' If there's a no-pet rule and they allow 99 of 100 owners to have pets, that's probably a waiver. But that's so rare. What's more common is that someone moves in with two dogs but you have a one-pet rule. And the board says, 'You can have both until one dies, and then you can't replace that pet.'"
Opotowsky also ends with a caution. "I had one case in the 1980s that involved a very obese person who picked the hours of 2-4 a.m. to pace in the bedroom," he recalls. "Trust me, this wasn't new construction; it was a converted apartment, and it wasn't really soundproofed. The owner below wanted the association to be a watchdog. But when a dispute is between unit owners, I encourage associations and management to stay out of it. They're not the policemen, and getting involved sets up a difficult precedent of the association as an intervener."