Home owner, can I sue HOA's Management Company

Hello,

I'm wondering if it's possible for a home owner to sue the HOA's management company directly. I don't want to sue the HOA because it's probably going to bankrupt the HOA and cost me even more in the long run, not to mention it's the management companies fault. They allowed the CC&R's for Owner to Renter occupancy to be violated.

I recently attempted to refi my condo and qualified for a fantastic interest rate that would have knocked 5 years off my mortgage and saved me $100 off my current monthly payment. I received a call from the lender saying underwriting can not approve my loan because home owner occupancy is below 51%.

The reason I want to go directly to the management company is because we, as owner, have no idea who is renting and what the levels are. Based off being denied my load, the management company knew and reported to my lend we were in violation.

Is that any way to recoup the money I've already lost (appraisal fees) and the potential money that I was going to save on interest? The caveat is that I don't want to destroy the HOA just the management company that allowed this to happen.

Thanks in advance

Most contracts with management companies designate them as the agent of the association. As such, when acting in that capacity, a suit against them would be a suit against the association (and its agent).

I am not a lawyer but I believe that you could only sue the management company without involving the association if you can prove that the management company was acting outside of its role as agent for the association.

In the US you can sue a ham sandwich for not having enough mayonnaise.

So let's see- you would sue the management CO for accurately answering a question from a bank...concerning a matter which is under the control of the board of directors...which was elected by you and your neighbors.

It's unfortunate that you lost money. However I can't see the management CO, OR the association being found responsible.

Now if you had asked...and they didn't tell you...that would be another matter.

Jamie, the answer to your question is yes. Anyone can sue anyone. If you want to lose a lot more money than bring this frivious law suit. It is too late for your HOA but others may want to amend their CC&Rs to prevent this from happening to them.

> Seems like a case of negligence by the management co. to me

It COULD be. Do you have a requirement that an owner get approval before renting? Did some owners ask, and get, such an approval putting it below the 51% threshold? Or did they go ahead and rent without a required approval?

> I thought it was the management company that is supposed to enforce the CC&R's, boy was I wrong.

The management is supposed to do as it is directed. The BOD is supposed to direct them to enforce the CC&Rs.

> the only way to rectify the situation is for the HOA to sue the home owners in violation at the cost of the HOA (me).

And now that it has been brought to their attention the BOD SHOULD enforce the rules, by legal means if necessary. On the bright side, you will only pay your share of the legal fees.

Who gets to decide which 50% of the units may be rented?

An attempt to limit rentals to a certain percentage is going to be nearly impossible to enforce without a lot more verbiage. Unless the CC&R’s require that the COA approve each rental, the association has no way of knowing the number of rentals and no means of preventing owners from renting out their units.

What was the board suppose to do when the 50% rental rate was exceeded? How were they supposed to decide which owners were allowed to continue renting their units and which ones had to evict their tenants? If I was told I had to evict my tenant while all the other landlords kept theirs, how long do you think it would take me to sue you and all the other owners? Trying to limit the number or percentage of rentals is futile and unworkable.

Many lending rules aren't making sense these days. But, I cannot see negligence on anyone's part due to renter-to-owner-occupancy ratio. What a bummer.

Jamie,

The 50% is the cut off where no lenders or companies that insure mortgages will approve loans or refinance mortgages. This includes even the FHA. Once you reach 51% the property is considered an investment property and not a residential property and falls under different lending gudelines. Unfortunately this is a big problem that has snuck up on a lot of associations with disasterious results... as you are finding out.
No one seemed to care about owner occupancy until the crash of the finiancial industry and the collapse of the housing market. Now everyone is scrambling to protect themselves from the mess that they helped create. Very frustrating.
If your CC&R's state that owner Occupancy must be above 51% then no rentals should have been allowed after that percentage had been reached. Someone should have been keeping an eye on who was renting.It ultimately is the BOD responsibility to ensure there were rules in place to ensure that the percentage stayed below 51%. Much easier said than done.
Do you require that owners provide a copy of their lease to the board ?
I would think there was a chance that the HOA could sue the homeowners who rented their homes when the percentage had gone above 50%. Homeowners have a legal responsibility to follow the CC&R's. Maybe you also can legally collect court and lawyer cost from those homeowners if you won the case.
This may seem like it is just your problem, but it is every members problem including the owners who rent. Have you tried talking to other owners ? The BOD should consult a lawyer and look for a way out of this mess. I hope that your BOD is taking this very seriously.

Fred,
Ours reads that we must stay in compliance with FHA,VA, Fannie, current laws. Which...I am not sure what 2012 laws read right now.

My thoughts are along the lines of Larry's. It appears to me our committment should be to current owners who wish to sell/refi first.
Anything that would hinder those transactions would not be permitted.

We are currently writing a leasing procedure to be followed by owners which includes:

1. Furnish BOD with leasing contract between Owner/tenant
a. includes stmt. reading tenant agrees to CCRs
b. includes insurance tenant policy listing owners name
as additional insured. This gives owner notice of cancellation
if tenant cancels policy.

2. Above must be in hands of BOD before tenant moves in unit.

We have 64 units. 4-4 plexes, duplexes and single puds. All one story.

I don't think we fall under different housing rules.

I know we are listed at the court house on the original plans as single family res.

I am interested in whether or not an HOA management company can be sued as well. The situation is embarrassing because I over reacted to the way our disrespectful manager harassed me on several occasions so I foolishly retaliated by calling her and leaving a threatening voice mail in February of 2010. To make a long story short the manager waited four months and instead of writing me a letter or having the association's attorney write a letter she went to the police and filed a complaint. Then with the help of the associations attorney and the Board President for our association went to the county requesting a restraining order. As of July 2010, the community manager who is a representative of the management company and an indirect employee of the association now has a Permanent Order of Protection against me which does not expire.

The odd factor of this injustice is that she continues to manage the property and therefore I cannot participate in any HOA functions or meetings. The only alternative for me is to contact the Board President who was present at the court case and obviously this Board member's interest isn't with the homeowner but with the employee of the association. My discomfort with this whole situation is deeper than not being able to participate. It just doesn't make logical sense that this manager and the management company she works for are not concerned about any liability. If the manager truly felt her safety was at risk why has her company not reassigned a new manager? This has caused me a tremendous amount of pain and suffering. Also, it could be that this was done because of the eight years of experience I have as an HOA manager and this retaliation enabled the Board President and the manager to run our community with little or no transparency. Both of these individuals do not want their authority challenged. Among other things various homeowners have expressed to me that the manager has received a bonus without the knowledge of the whole community and it has been implied that the Board President is receiving a garage in the community without paying for it.

A tough love, but fair answer.

Billie,

For the Colorado court to issue a Permanent Order of Protection either you failed to show up for the hearing or did show up and the court made the decision based on what evidence they heard.

Either way,you may request the court to remove the order. Based on this article The Effects Of A Civil Protection Order there are a lot of unintended consequences associated with such an order and my advice would be to contact a local attorney to see what steps you need to go through to have that order removed.

Tim

Thanks Tim. That seems like the best way to go.

Please start a new topic. It's the best way to answer you. Short answer is NO you can't deduct it from your dues. Still have to have a record you paid them Would you trust them to show a credit? Nope.