4 Reasons HOAs Get Sued

Homeowners’ associations and community associations offer a wide variety of attractive benefits to residents and prospective residents. However, because these associations require a significant amount of money invested into them by residents, some disagreements may quickly escalate into lawsuits. The most common lawsuits that HOAs faces are ones that involve either money or lifestyle issues. From the office of Kevin Davis Insurance Services, here are four of the most common lawsuits that HOAs and community associations regularly face.

1. Maintenance Neglect

If an HOA is not meeting their obligations for common area maintenance and repair, it can be subject to litigation. In some cases there may be underlying issues beyond the board’s control that cause a delay in regular upkeep, such as a natural disaster or a conflict with a maintenance provider’s contract. Whatever the case may be, association managers should always communicate with residents to prevent their concerns from turning into claims against the community association.

2. Discrimination

Like any other business or organization, HOAs and community associations are subject to federal regulations such as the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA). The governing documents of many HOAs and community associations give board members the right to make decisions on whether or not to rent or sell a house to someone. However, these decisions must always be carefully made as to not appear discriminatory based on race, color, religion, sex, national origin, familial status or disability. Unfortunately, when a decision is made against someone, they may feel discriminated against regardless of whether or not that is the case. In such situations, the board can rely on their directors and officers (D&O) policy to protect them against financial loss resulting from a discrimination claim.

3. Pet Restrictions

Disputes regarding pet restrictions are also an extremely common cause of HOA and community association lawsuits. Some governing documents can be vague in terms of defining what is considered a household pet or not. As pet trends change, it’s important for board members to review governing documents to ensure they are not improperly penalizing residents.

4. Election and Board Decision Disputes

Residents who live in community associations put a lot of faith into their board members, so when they feel like they aren’t being represented appropriately, they are well within their rights to dispute board decisions or election results. These disputes can lead to recalls or lawsuits, which can be exhausting, expensive and time-consuming, regardless of the validity of residents claims or concerns. As long as board members are following their governing documents to the letter, most claims against them can be dismissed. However, this is another area where a D&O policy can help protect individual board members from claims against them.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our President Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (877) 807-8708 to speak with one of our representatives.