HOAleader.com - Tip of the Week - November 2, 2012
Published: Fri, 11/02/12
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Has This Board Gone Too Far?
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In this week's tip, we discuss the lessons of
a recent case involving a Florida HOA and its
10-year battle with an owner.
Here's the skinny. On September 21, 2012, home owners
in a Florida HOA were awarded $85,000 in damages in
a lawsuit they brought against their HOA, according
to the Tampa Bay Times. The fight was over a $2,212
bill for sod installed by the HOA that the owners
disputed. The judge found that the Pebble Creek
Homeowners Association failed to comply with its
governing documents in imposing the charge. The owners
spent more than $222,000 to get to this point-and
the association probably spent nearly as much-and
the next step is for the judge to determine whether
to force the association to reimburse the owners
for their attorneys' fees.
The question for most boards isn't whether they
enforce their governing documents. It's how much
money and time to spend in battles doing just that.
"The first questions are what the documents entitle
you to do as a board as far as fining and how much
teeth does your process have," says Robert White,
managing director of KW Property Management & Consulting
in Miami, which oversees about 125 associations
totaling 30,000-35,000 units. "The final question,
how far to pursue enforcement, is a business judgment
issue. Did the board use its best judgment in its
actions? From a management standpoint, we'll suggest
to the board, 'Hey, you should go on and pursue this'
or 'We think you should stop; it's starting to get a
little overboard.' But at the end of the day, it's
the board's decision. My gut take on this case is
that it looks like somebody had an axe to grind."
In Michigan, a board will be protected from a breach
of fiduciary duty claim if it followed the advice of
an expert, such as an attorney or accountant. "It's
very difficult to say the board breached its duties
if it engaged in a long, protracted battle if its
actions were taken on the advice of the experts,"
explains Nathaniel Abbate Jr., a partner at Makower Abbate
& Associates PLLC in Farmington Hills, Mich.,
who represents associations.
What if a board refuses to follow Abbate's advice?
And can you pursue some owners and not others?
Find out in our new article, Pursuing Fines,
Part I: Did This Board Breach Its Fiduciary Duty?
http://www.hoaleader.com/members/777.cfm
Best regards,
Matt Humphrey
President
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