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Subject: Lawsuit
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DebraL5
(Texas)

Posts:15


09/04/2019 9:33 AM  
The treasurer on our board is suing the HOA. This information is being kept a secret from owners. The only reason I know is my husband is on the board and I overheard him discussing it with the Pres of the board on the telephone. Also, we just held elections for our board and I wonder how many would have voted for this man had they known we were being sued by him. Thoughts?
SheliaH
(Indiana)

Posts:2701


09/04/2019 2:34 PM  
Depending on what he's suing the association about. For example, if he's upset about an exterior change request being denied, homeowners don't necessarily need to know that. The case may also be settled out of court and that could take care of it. On the other hand, if this lawsuit could result in the association losing A LOT of money (whatever that is), it may be appropriate to say the association is being sued, but save the details for later. It'll come out anyway (especially if you lose), but usually, it's not a good idea to discuss pending litigation because so many things can change. Since you're talking about a board member suing the association, all sorts of rumors and half-truths and damned lies may get out, not to mention people taking sides, and then running the association becomes even more difficult than what it already is.

You might suggest to your husband that the board consult its attorney to see what, if anything, can be disclosed at this time and when. In the meantime, it seems to me this treasure is rather daft in suing an association he/s still a part of and serves on its BOARD. As an officer, no less. The appropriate thing to do is to for him to step down, otherwise, all of his actions will come into question because no one will know if he's trying to get information to help his case or if he can be objective. In other words, it's a major conflict of interest.

If the guy wants to stay on the board, he should give up the treasurer position, or the rest of the board should remove him from that spot (check the documents) he should also be prepared and willing to leave the room when the lawsuit is discussed, and yes, that would include any and all executive sessions where it's discussed.
JohnC46
(South Carolina)

Posts:8733


09/04/2019 7:11 PM  
According to our Bylaws an owner engaged in any legal action against the HOA can neither run for nor serve on the BOD. In the case of the OP, the BOD Member suing the BOD would have been suspended from the BOD while awaiting the result of the lawsuit.
PaulJ6
(New York)

Posts:319


09/05/2019 2:20 AM  
Posted By DebraL5 on 09/04/2019 9:33 AM
The treasurer on our board is suing the HOA. This information is being kept a secret from owners. The only reason I know is my husband is on the board and I overheard him discussing it with the Pres of the board on the telephone. Also, we just held elections for our board and I wonder how many would have voted for this man had they known we were being sued by him. Thoughts?




Hopefully he’s not taking additional information that he knows as treasurer and using that information against the HOA.

Those board meetings must be lovely.

Why wouldn’t the HOA disclose the lawsuit to get him to lose votes? Or remove him as treasurer?
MelissaP1
(Alabama)

Posts:8603


09/05/2019 4:11 AM  
A lawsuit shouldn't be kept secret from the HOA members. Now that doesn't mean one goes running their mouths about the details of the case. Just that there is a pending lawsuit against the HOA. That it is about X and they want X. Lawsuits can't be hidden even with big corporations.

Now the board should have 1 person usually the President assigned to talk to the HOA's lawyer. The board can discuss the issue but should be limited to approving the President/POC to be the one to actually be point to the lawyer. It will lessen confusion and expense.

Suing your HOA is suing yourself and your neighbors. So it's not something that should be kept in the dark. Just the details being discussed with the lawyer.

Former HOA President
LetA
(Nevada)

Posts:789


09/05/2019 5:31 AM  
I am at a loss on why each owner is not notified about such lawsuits. When a lawsuit is filed, typically only the BODS and or the Property Manager are served. If suing the HOA is suing all the owners, why aren't all the owners served? yes it could be a HUGE cost, but owners should know.
CathyA3
(Ohio)

Posts:461


09/05/2019 6:46 AM  
Posted By LetA on 09/05/2019 5:31 AM
I am at a loss on why each owner is not notified about such lawsuits. When a lawsuit is filed, typically only the BODS and or the Property Manager are served. If suing the HOA is suing all the owners, why aren't all the owners served? yes it could be a HUGE cost, but owners should know.




Not a lawyer, but I suspect it's due to the difference between suing a corporation (the HOA) vs. suing the homeowners as individuals. I know that I'm never notified about lawsuits against corporations in which I own stock, even though I am "an owner" and may suffer a financial loss as a result.

I do agree that at some point homeowners should know about it. I'm just not sure exactly when that should occur, and I suspect it depends on the nature of the lawsuit, so we can't generalize.
SteveM9
(Massachusetts)

Posts:3362


09/05/2019 7:01 AM  
in my state as with most, when selling or refinancing a house in hoa or condo a bank requires a resale certificate from the association. in that document pending lawsuits must be listed and the bank can deny your load or refinance based on the details of that suit. if its something minor they dont care. if its huge, the bank doesnt want to risk giving you the money.

probably wont be a secret for long.

PaulJ6
(New York)

Posts:319


09/05/2019 7:21 AM  
Posted By CathyA3 on 09/05/2019 6:46 AM
Posted By LetA on 09/05/2019 5:31 AM
I am at a loss on why each owner is not notified about such lawsuits. When a lawsuit is filed, typically only the BODS and or the Property Manager are served. If suing the HOA is suing all the owners, why aren't all the owners served? yes it could be a HUGE cost, but owners should know.




Not a lawyer, but I suspect it's due to the difference between suing a corporation (the HOA) vs. suing the homeowners as individuals.




You are correct.
DebraL5
(Texas)

Posts:15


09/05/2019 8:30 AM  
He is suing because he has mold in his unit. He says it came from the drop down part of his ceiling and he is calling that drop down a common area and is suing for neglect. There are 80 units in this 9 story high rise on the beach.
CathyA3
(Ohio)

Posts:461


09/05/2019 9:17 AM  
Posted By DebraL5 on 09/05/2019 8:30 AM
He is suing because he has mold in his unit. He says it came from the drop down part of his ceiling and he is calling that drop down a common area and is suing for neglect. There are 80 units in this 9 story high rise on the beach.





Oo oo oo, I know all about mold in condos!

* Your governing documents will spell out what is part of the unit and what is common area. The homeowner is responsible for repairs to his unit and the association is responsible for repairs to the common area.

* The only time this changes is if the association is carrying what's called all-in insurance. If there is an insurable event, the association's insurance may cover repairs to the unit. Not all condo associations have this type of insurance - some insure only the common areas. So you need to know what kind you have.

* People often confuse maintenance and insurable events. Association insurance will cover events that are sudden and not preventable (as the broken pipes or storm damage). Mold is almost always considered a maintenance item since it results from water intrusion occurring over an extended period of time.

* Boards often take responsibility for unit damage originating in the common area. According to my insurance agent, they should not do that. Insurance doesn't look at "who is to blame" - it's strictly who is responsible for what according to the policies and the governing documents.

* With the incident above, there would be negligence only if the unit owner was aware of the leak in the common area *and* reported that leak promptly *and* the association failed to make repairs. The problem with small leaks is that the mold is often your first clue that there is a problem, and it generally takes months or even years to make itself known. That is not negligence. That is why condo owners carry insurance on their units.

I hope the person with the mold did his homework, because he may be spending a lot of money on legal bills as well as condo repairs.
NpS
(Pennsylvania)

Posts:3762


09/05/2019 10:53 AM  
If I was the complaining homeowner, I might react negatively to any attempt to restrict my responsibilities as a BOD member. Depending on the circumstances, it might even get me to add a retaliation claim to my lawsuit.

On the other hand, I would be an adversary in the lawsuit, and I should be excluded from all conversation that the BOD has about the lawsuit. I shouldn't be allowed to have a seat on both sides of the table.

As to letting homeowners know, I expect that the BOD spoke with the HOA attorney and are following that advice.

Sikubali jukumu. Read all posts at your own risk.
KerryL1
(California)

Posts:6636


09/05/2019 11:26 AM  
But, debra, what was the source of the moisture or water that caused the mold?

What is a "drop down" part of a ceiling? A soffit?
JohnC46
(South Carolina)

Posts:8733


09/05/2019 1:04 PM  
As I understand in a condo building the owner is responsible for walls in, floor up, and ceiling down. Now if a drop ceiling is below the actual ceiling (that is what dropped means) and the problem is between them, I say it is the owners responsibility.
MelissaP1
(Alabama)

Posts:8603


09/05/2019 3:40 PM  
Why is this a lawsuit and not an insurance claim?

Cathy3A - You said that you have never been notified about lawsuits your corporations you have stock in. This is a requirement of the corporation to tell their stockholders. It is in the company's "Prospectus" that is sent out to their stock holders. If you read the "fine print" as I call it, it has to be revealed in it. So if you get a "Prospectus" from a corporation READ it. The good and the bad has to be revealed in it.

Former HOA President
PaulJ6
(New York)

Posts:319


09/05/2019 4:09 PM  
Posted By NpS on 09/05/2019 10:53 AM
If I was the complaining homeowner, I might react negatively to any attempt to restrict my responsibilities as a BOD member. Depending on the circumstances, it might even get me to add a retaliation claim to my lawsuit.

On the other hand, I would be an adversary in the lawsuit, and I should be excluded from all conversation that the BOD has about the lawsuit. I shouldn't be allowed to have a seat on both sides of the table.

As to letting homeowners know, I expect that the BOD spoke with the HOA attorney and are following that advice.




This is correct. The board should create a special committee of a few board members (not party to the suit) who could direct the suit.
DebraL5
(Texas)

Posts:15


09/05/2019 4:32 PM  
It’s a lower part of the ceiling where duct work, electric wires, etc are. He is claiming because the unit next door to him opened up their part of the drop down it caused moisture from humidity into his unit. It’s extremely hard for me to understand. He is not living in the unit, has not treated the mold, it is continuing to grow, and the court date is not until 2021. There was no actual water leak. It’s all from humidity. We live on the beach. I am terribly concerned because I am on a fixed income and a large special assessment would wipe me out.
DebraL5
(Texas)

Posts:15


09/05/2019 4:38 PM  
There was no leak. He claims his neighbor opened their part of the drop down allowing humidity to cause moisture. We live on the beach. Everyone has to take special care to prevent mold. He is not living in the unit, has not had the mold treated and it is continuing to grow.
DebraL5
(Texas)

Posts:15


09/05/2019 4:44 PM  
The homeowners are paying for this attorney so how can it be right to keep it from us?
PaulJ6
(New York)

Posts:319


09/05/2019 5:35 PM  
Posted By DebraL5 on 09/05/2019 4:44 PM
The homeowners are paying for this attorney so how can it be right to keep it from us?




Corporations don't disclose all lawsuits to stockholders. It's a similar concept.

HOAs, in my experience, are super-secretive, particularly about lawsuits. I'd think, though, that in this case, disclosing the suit could help.
MelissaP1
(Alabama)

Posts:8603


09/05/2019 5:41 PM  
It shouldn't be kept. Also this person suing has the legal obligation to mitigate their own damages. Meaning they can't just let the mold grow. They need to take the proper steps of rectifying the situation. It is the expense of them doing so or insurance claim money they are to sue for.

I think your HOA is dealing with a bit of an idiot or a suspicious Treasurer. I'd remove him from that position ASAP. Anyone knows if you live near a beach that you are going to be at a higher risk of getting mold. Also living in a salt environment other outside items are subject to erosion issues.

Your HOA should contact their insurance company and maybe use their lawyer to represent the HOA. Plus make sure the HOA is using just ONE POC to talk to the lawyer. Your HOA can also file a countersuit and ask for it's legal expenses to be paid if they lose. Which they have a very good chance or atleast only getting the expenses back they spent on remediating the mold problem.

I would also say if they are blaming the neighbor, then it may not even be a HOA issue. It should be a claim against that owner's homeowner's insurance. So would not be surprised if case is thrown out of court based on the wrong party being sued. Something should also question with the lawyer. Hopefully your HOA didn't hire one that says "I will do whatever you tell me to do" type. That should raise red flags...

Former HOA President
KerryL1
(California)

Posts:6636


09/05/2019 8:44 PM  
In our condo high rise, IF unit has issues that might damage the common area or other condos, the board has the right, per our CC&Rs to send workers in to fix the potential threat. This mold might be such an occasion.

Not that it matters, but is th unit vacant?

What do your documents say???
DebraL5
(Texas)

Posts:15


09/05/2019 8:58 PM  
Thank you so much for your advice. My husband is secretary on the board so tonight I read every page of his big book. I found only one small paragraph pertaining to the complaint. Turns out it says nothing about a”drop down” ceiling being opened and causing moisture. His complaint says his next door neighbor left her sliding glass door opened causing temp to rise to 77 degrees and supposedly causing condensation in his unit resulting in mold. I don’t know or understand why it is a lawsuit and not an insurance claim. My husband was just elected to the board two months ago so he has a lot to learn. I’m glad I found this forum to ask questions and get advice. I’m sorry everybody for confusion with the drop down ceiling because that’s the hearsay info. Then I read the initial complaint. Thanks for all your helpful advice everyone!
DebraL5
(Texas)

Posts:15


09/05/2019 10:28 PM  
I spent most of the evening reading all the mi utes of past meetings, audits and financial reports etc. tomorrow I will re-read all the bylaws. The owner lives elsewhere and uses it as a vacation home and a rental. However if the mold is bad I don’t imagine he is renting it out. And he is doing nothing to stop the mold. The board seems content to wait until the lawsuits court date in 2021. In the meantime all owners are being kept in the dark. The only reason I found out was my husband is on the board (only two months) and I overheard him discussing it with the President of the board on the phone. His initial complaint was in August of 2018 and the matter is still not resolved. I feel so bad for my fellow owners (some friends) who are being kept in the dark. Thanks for your response.
MelissaP1
(Alabama)

Posts:8603


09/06/2019 5:00 AM  
He can't legally rent the place out if it has mold. So this guy sounds like he's going to take the HOA for a ride. Otherwise why is he waiting? Why is this a HOA matter? He claims his neighbor did the damage, then why the HOA responsible?

I would have the HOA talk to their insurance carrier about this situation. It could be filed as an insurance claim later. Something to consider.

The owners should NOT be in the dark about the lawsuit. Details of what is discussed with the lawyer yes. There is a form (PUD) form that is filled out for certain loans. (FHA etc...) That form the HOA has to reveal if the HOA is involved with a lawsuit, liens, or foreclosure. Plus their rental percentage. This matter for the offering of some loan programs and the rate of refinancing. Re-fi rates can be effected. FHA loans or other government like loans may not be offered.

We aren't talking about making a big deal on this. Just that there is one filed and for what. Suing your HOA is suing yourself and your neighbors. So considering you are ALL neighbors, you should know the effects of such filings.

Former HOA President
PaulJ6
(New York)

Posts:319


09/06/2019 6:07 AM  
Posted By MelissaP1 on 09/06/2019 5:00 AM
Suing your HOA is suing yourself and your neighbors.




I appreciate your perspective on that. Sometimes an insurer covers everything: legal fees for the HOA and the damage that the HOA has to pay. So even if the HOA's insurance premium goes up due to a lawsuit, if an owner suffers $10,000 in damage and recovers that from the HOA (paid by the insurer), and the owner's HOA dues go up by $25 per year to pay the additional insurance premium, an owner may figure that it's worth losing $25 to gain $10,000. Even if an insurer doesn't pay, an owner may figure that the financial and other benefits from a lawsuit outweigh the financial and other negatives.
MelissaP1
(Alabama)

Posts:8603


09/06/2019 2:51 PM  
The fact still remains you sue your HOA your suing yourself and your neighbors. So it's just the consequences you have to accept or decide NOT to accept. There are ALWAYS consequences to your actions. No judging if you are right or wrong when I say this. Pointing out a CONSEQUENCE you should be prepared for and understand. Not everyone is going to be on your side when they find out your suing them. Your best bet if your suing your HOA is to do it as a large group. However, if you have a large enough group then you don't have to sue at all. You can vote out a board or change the rules.

Former HOA President
SueW6
(Michigan)

Posts:586


09/06/2019 4:51 PM  
Debra
If a court date has been set, then both sides are building their cases.

You don’t say what the board is doing about the accusation that the HOA is responsible for the mold. Ask your husband what steps the board has taken. Has the lawyer done his/her part about determining cause? Did the neighbor break any rule about opening the door wall?

The burden of proof is on his plate.

In the meantime this officer should take a leave of absence from his board duties.
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