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Subject: Board members liable?

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WoodyB
(Colorado)

Posts:9

08/06/2006 5:55 PM
Is it true that (in at least the state of Colorado) if any homeowner sues the Board and wins, the Board will have to pay for everything including court costs out of their own pockets instead of HOA insurance paying these costs?

RogerB
(Colorado)

Posts:3724

08/06/2006 6:08 PM
No Woody. In Colorado the prevailing party now is eligible to have their legal fees and court costs paid. This could be paid by the HOA insurance coverage.

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

CharlesW1
(Georgia)

Posts:820

08/07/2006 8:18 AM
I’m starting to understand HOA’s more and more with every post written. Are you saying if a HO sues the BOD and wins then the BOD should personally pay all the court costs? HMMMMM doesn’t sound right to me. Maybe so though I don’t know for sure! Living in a volunteer HOA community, it is difficult enough to get HO to run for position on the BOD. If this were the case I believe this would intimidate many from wanting to volunteer. If your BOD is made up of all volunteers, then why would any HO take the chance of representing the community if they could possible be sued upon? Chuck W.

Charles E. Wafer Jr.

RogerB
(Colorado)

Posts:3724

08/07/2006 9:48 AM
Charles, please don't let the Directors and potential Directors know this little know fact It is hard enough to find those few owners with a desire to serve their community! Of course there may be less danger in a volunteer HOA. That's because when an HOA has no "teeth" to enforce restrictions why would they try to the extent of evolking a suit. Have you heard, "Directors have a fiduciary duty"? When there is a suit by a homeowner it may include the Association, the Board of Directors, and each and every Board member. That is why every Director should not only be covered by the HOA's insurance and protected by the "Corporation Shield" but should also add a rider to their personal homeowner's insurance. And most important they should always act in good faith and use good business judgement.

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

CharlesW1
(Georgia)

Posts:820

08/07/2006 10:20 AM
Roger, So it is true then. That’s no good. I’m running for position on the board. So potentially I could be sued? I know how difficult it is to get HOs to volunteer to be on the BOD. You don’t have to remind me. It’s sad but, true. One of life’s potentially largest investment, and yet there are some HO’s that could really care less. I hear some HO’s say “they hate HOA’s and they have done nothing for my property values” yet they have done nothing to improve the appearance of their home, either! The things I see make me thankful for an HOA! I will continue to pursue my interest in having a seat on the BOD. Although now knowing I can potentially be sued does frighten me some. Thanks Roger Chuck W.

Charles E. Wafer Jr.

BeauJ
(Arizona)

Posts:12

08/07/2006 1:24 PM
It is my understanding if the Board has exercised reasonable business judgment in making a decision (business judgment rule) the court will not consider the Board negligent in its fiduciary duty, nor will the court substitute its judgment for that of the Board..but the Board must demonstrate how it reached said decision. All members of the Board must take reasonable care, not acting on their own in resolving Associations business. I would suggest, not using e-mail, or talking with friends, neighbors, etc anbout Board business...Words can be taken out of context..so have several people present..A tape recorder is very useful also..I strongly suggest that at the orientation meeting for the Board & Committees, that your Attorney be there to speak about duties..Beaujo

BonnieE
(Illinois)

Posts:176

08/07/2006 1:34 PM
RogerB made the statement: "That is why every Director should not only be covered by the HOA's insurance and protected by the "Corporation Shield" but should also add a rider to their personal homeowner's insurance." What type of rider should be added to a Board member's personal HO insurance? I have condo insurance. Thank you!

RogerB
(Colorado)

Posts:3724

08/07/2006 7:11 PM
Bonnie, talk to your insurance agent.

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

PatrickS
(Washington)

Posts:34

08/08/2006 10:31 AM
One of the things that I try to say to everyone that says they hate the HOA is that THEY are the HOA. If they are unhappy, then get involved. Everyone in our HOA was made well aware the HOA before they purchased the house, but since things got lasx over the years, CC&R violations are abundant. If is a really long road ahead for us three BODs, but we are chugging along letting the nasty comments slide off our backs. Comes with the job I tell them. Patrick

CharlesW1
(Georgia)

Posts:820

08/08/2006 10:48 AM
PatrickS, I say that same thing all the time! It true for the most part. Chuck W.

Charles E. Wafer Jr.

BrianB
(California)

Posts:1748

08/08/2006 11:17 AM
couple of things: First, anyone can sue anyone in this country for anything. Period. Being sued is not something you can ever prevent. I could sue roger* right now, for letting his dog urinate on my flowerbed, despite the fact that we live in different states, roger doesn't have a dog, and i don't have a flowerbed. The judge will throw the case out, but roger would still have been SUED. *thanks roger, for being my guinea pig example HOA's should have insurance to cover lawsuits. In general, that's where the money comes from to pay a claim, should one be granted by the judge against the HOA. If there is no insurance, then the claim becomes assessed against the assets of the HOA, and guess what? Everyone in the HOA get's to pay it (ie, dues go up). Only if a judge summarily orders the payment against an individual will that person's assetts be in jeopardy. Can it happen? yes, but the judge would have to be really hacked at how badly a person acted outside of their role as board member (there would likely have to be VERY extenuating circumstances). A person could try to sue (name) an individual instead of an HOA, but that's more rare, and would again require proof that the individual really went out of their way to be bad.

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