HOAleader.com - Tip of the Week - September 20, 2019
Published: Fri, 09/20/19
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As a Condo/HOA Board Member, Would You OK This Lawsuit?
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In this week's tip, we ask our experts if a condo board's lawsuit would fly in their states.
A condo board in Manhattan sued to block construction of a 50-block bike lane for many reasons, among them that the neighborhood will lose free parking. Though its lawsuit has so far been dismissed, the question is whether this is a proper use of condo funds. Our experts weigh in here.
It's a long-standing no in California. "We have a case in California, Spitser v. Kentwood Home Guardians, that's pretty similar to this," states Susan Hawks McClintic, co-managing shareholder and the chair of the community association transactional practice group at the law firm of Epsten Grinnell & Howell in San Diego.
"Spitser involved an airport, and an association sued, saying the airport was creating a nuisance because of the noise," she explains. "The association had to have an assessment to pay for the lawsuit. One of the homeowners sued to block it and won.
"The court evaluated whether under the association's own governing documents the association had the authority to use assessment money for something outside the community," adds McClintic. "The answer was that they didn't have that authority.
"In fact, we've had that situation come up in a lot of different contexts," she says. "There was a huge residential drug treatment facility going in a high-end area right next to an association, and the board asked us whether it could spend association money to fight this facility being developed right next to them. Their documents didn't allow it.
"In another association, the city wanted to remove a gate on a public road that controlled access to a community, and the association wanted to fight that," recalls McClintic. "It was civil war there — there were very strong arguments on both sides of the argument. But the gate wasn't in the community, and a lawsuit against it wasn't a permissible use of association funds."
The answer in New Hampshire is the opposite. "The short answer is that the board has the right to file suits on behalf of the association — that's in every document I've seen," according to Robert E. Ducharme, founder of Ducharme Law in Stratham, N.H., who specializes in representing community associations. "If members don't like it, they can get rid of those board members and stop the lawsuit. That's democracy.
"I once heard a judge say in response to owners' complaints about a board, 'Geez, if the board is so bad, why do owners keep reelecting them?'" recalls Ducharme. "But the bottom line is that you can withdraw a lawsuit at any time, so the remedy is to vote those board members out if owners aren't happy."
Other states have added to their statutes provisions that require boards to get owner approval before filing a lawsuit. Find out more in our new article:
https://www.hoaleader.com/members/3985.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Who Knew Basketball Hoops Could Be So Complicated for HOAs?
An HOAleader.com reader writes, "A prospective purchaser has asked the board for confirmation of rules/guidelines for portable [basketball hoops] before buying. He sees our docs have none and is asking for written clarification. I'm told we've had two portables here for 10+ years, each located in the front of the garage just off the driveway (not located down close to street). No ARB applications exist, nor any documentation of how or if the prior boards reacted when the portables arrived..."
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An HOAleader.com reader writes, I live in a small, 28-home HOA, most of which are second homes, and the HOA just passed new bylaws (which I voted against). In the bylaws, it's written that the officers can't be held legally responsible for anything they do as an officer of the HOA and if there were a lawsuit filed against them, the association members would be responsible for their legal defense.
Click here to read full article:
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Click here to read full article:
https://www.hoaleader.com/members/What-Do-When-CondoHOA-Board-Member-Breaches-Duty-Confidentiality.cfm
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HOA Reserves and Other Funding Options: Tips to Be a Smart HOA Money Manager
Watch this information-filled webinar led by three community association experts - one a manager, one a lawyer, and one a reserves analyst. After just one hour, you'll know the HOA industry's best practices when it comes to money matters at your HOA.
Click here to read full article:
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Architectural Review: How to Respond To "Hey, It's Not Prohibited in the Condo/HOA Governing Documents"
An HOAleader.com reader has a very simple question on Florida's HOA statute governing architectural improvements, but we're guessing there's no easy answer: "How much case law is out there concerning HOA members' right to do certain things that aren't prevented by the governing documents?"
Click here to read full article:
https://www.hoaleader.com/members/Architectural-Review-How-Respond-Hey-Its-Not-Prohibited-in-CondoHOA-Governing-Documents.cfm
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