Thinking of suing your HOA? Has your HOA filed a lawsuit against you?
Read this page for important information, and personal accounts from homeowners and residents who have lived through the ordeal.
By Deborah Goonan, Independent American Communities
I’m not an attorney. However, over the past 5 years, I have been reading legal complaints, case summaries, and generally following the progress of legal disputes in Association-Governed Housing. I read and analyze pages and pages of dry, verbose information, including legal opinions, to gain a better understanding of exactly how current laws work for or against housing consumers.
In other words, I look for patterns of dysfunction and injustice through the lens of consumer protection.
Here’s what consumers need to know:
Homeowners, condominium, cooperative, and property owners associations are collective legal entities – usually incorporated. Governing documents of HOAs – which include Declarations of Covenants, Conditions, and Restrictions (CC&Rs), By Laws, and Articles of Incorporation – are legally binding on both individual members and their Association, with U.S. courts generally viewing the relationship as contractual between and among the parties.
But that contract is usually written by and for developers, making it one-sided in favor of the HOA. In addition, governing documents are not subject to state or federal review, and state laws impose very few restrictions on the terms of HOA contracts. A buyer or heir to HOA property must agree to all terms without any opportunity for negotiation before taking title to that property. Take it or leave it.
And, it’s important to note that state laws governing HOAs are usually written by, and therefore heavily skewed in favor of, real estate industry stakeholders: land developers and home builders, bulk investors, HOA management firms, HOA attorneys, and so on.
The HOA industry is, at best, loosely regulated by a patchwork of inconsistent state laws, and a handful of regulatory agencies. Most often, state Ombuds and regulatory departments of business or real estate – if they exist – are established with virtually no budget to investigate consumer complaints, and no mandate or authority to enforce statutes or HOA governing documents.
I call it Regulatory Window Dressing. Elected officials give the appearance of doing something to rein in excessive power and abuse of HOAs, without really doing anything at all.
That’s why, in most cases, an Association member’s sole option to enforce or defend their rights against their Association is engaging in a legal battle in civil court.
I regularly hear from owners and residents of Association-Governed Housing. I listen to their frustrations and their personal stories, as do hundreds of other housing consumer rights advocates across the U.S.
This page summarizes the struggles faced by owners and residents of HOAs, and includes a series of personal statements from individuals whose American Dream has turned into the American Nightmare.
What to expect from the HOA litigation process
The legal dispute takes over your life. Litigation involves a great deal of your time and effort, and the information gathering process can seem invasive. You will be expected to provide documentation of your complaint or facts in your defense. Your attorney or the HOA attorney will demand that you to turn over copies of any and all written correspondence you have had with the board, manager, or collections agency, including emails. The list of correspondence includes letters, invoices, receipts for payment, violation notices. Relevant photographs, social media posts, voice mails, and recorded phone conversations are also subject to examination by both Plaintiff and Defense attorneys. One or more rooms in your home may be filled with stacks of important papers and files related to your lawsuit.
You may become the enemy. Most individuals report feeling shunned by their neighbors, and being labeled as “disgruntled,” “unreasonable,” “malcontents” or “troublemakers.” Your HOA board may openly blame you for creating the problem and saddling the Association with unnecessary legal expenses.
You find out who your real friends are. In the early stages of a dispute, you’re likely to have several friends and allies. But once the lawsuit is filed, many will shy away from you. Some will support you privately, but will not defend you publicly. Those who are willing to support you and stand by you through this ordeal count as true friends.
The dispute strains personal relationships. Isolation and social rejection spreads to your family members. This puts a strain on couples and families. Friends may also avoid your partner. Play dates with your children may stop, or a child might be bullied at school. Family stress and feelings of rejection can lead to behavior and social problems for children. Some people report that a prolonged lawsuit has led to the end of their marriage, because one partner wants to give and settle, while the other partner wants to hang tough and fight for justice.
You get the Silent Treatment. Once litigation begins, your HOA Board and Manager will become less transparent. All communication with your HOA must be directed through the attorneys. Open meetings become less frequent.
Your requests might be ignored or rejected. Quite often, your HOA will not cooperate with your requests for access to documents. This is one of the most common complaints I hear. In addition, your requests for maintenance, as well as approval for home modifications that require permission from the HOA, may be delayed, ignored, or rejected. Some owners have received “cease and desist” letters from the HOA attorney, accusing them of “harassment,” and threatening legal action.
Retaliation is common. If you have a bully on your board or in charge of management, aggressive and abusive behaviors often escalate. Some HOAs will go out of their way to humiliate the homeowner by any means possible, including publicly spreading rumors, lies, and false accusations. Particularly bitter disputes may even devolve into physical assault. Police complaints may be filed, even if there is no basis, as an intimidation tactic. Sometimes arrests are made, and the charges later dropped. But by that time, reputations are already damaged.
Lawsuits often drag on for years. The Civil Litigation process is anything by Civil. It is fraught with endless motions, counter-suits, depositions, and a long and invasive discovery process. Expect the process to take at least 2 – 4 years. A complex case involving multiple parties or counter-suits and appeals can drag on for 5 – 10 years.
You don’t know who you can trust. I often hear from HOA residents that they are fearful of talking to anyone who might report back to their HOA board or manager. While many of these fears may be unfounded, HOA disputes can divide communities. When your formerly friendly neighbors snub or ignore you, it can destroy your sense of trust in others as well. And when you don’t trust people, you tend to self-isolate, compounding feelings of rejection and loneliness.
You might go broke. The legal process can be very costly. Attorneys can quickly burn through a $10,000 – $20,000 retainer. And, because finding a resolution can take years, your legal costs can exceed $30,000. As you’ll see in some of the personal stories below, legal costs can well exceed $100,000, particularly if your HOA prevails and is awarded their attorney fees by a judge.
By the way, don’t expect an attorney to take your case on contingency. Here’s why.
Prolonged stress can harm your health. I have heard reports of depression, anxiety, and sleep disorders. Some owners become so emotionally distraught, they consider or attempt suicide. Sadly, a few have taken their own lives. Others find that stress exacerbates pre-existing health problems. Some have reportedly developed new illness, such as an autoimmune disorder or cardiac distress. People with disabilities have told me the stress makes it more difficult to cope, especially when the HOA is refusing to accommodate their disability in violation of Fair Housing Laws.
There’s no easy escape. During the heat of the legal battle, though you might choose to move elsewhere, selling your home can be difficult or next to impossible. That’s especially true if your HOA has filed one or more liens as a result of unpaid assessments. (In many states, unpaid fines turn into unpaid assessments.) If your dispute involves defective construction, environmental contamination, or significant damages that your HOA refuses to repair, your home is probably not marketable.
In the end, you may be forced to move. Owners and residents are almost always pressured by the HOA and their adversarial neighbors to move. Many ultimately do, even if they “win” their lawsuit, simply to escape community tension and start over in a new neighborhood. It’s fairly common for a legal settlement to require you to sell your property and vacate the HOA.
Out-of-court confidential settlements are common. Most lawsuits never make it to trial, and instead end outside of court with a settlement. A condition of most settlements is that both parties agree to keep the details confidential. Although you may not be comfortable with a “gag-order,” agreeing to keep quiet about the outcome of litigation may be the best way to put an end to prolonged litigation.
Bottom line – It’s not a fair fight. It’s not that individual Association members never prevail in litigation. But the odds are stacked against them.
It’s relatively easy for the HOA to meet its burden of proof when suing a member. The HOA can often prove its case against you by referring to what is written into the governing documents. The HOA also gains considerable authority under state law. State laws enable most Associations to take various punitive actions against a property owner, to include issuing fines, placing a lien on your home, and even foreclosing your home to collect on that lien.
On the other hand, it’s relatively challenging for an individual owner or resident to prove a case against the HOA. For one thing, an Association is almost always represented by an aggressive, well-trained HOA attorney – paid by an insurance company – who is very familiar with the law, and knows how to defend claims against the Association or board members.
Very few attorneys will represent a member against the Association, and those that are willing to take a case are not necessarily on equal footing with the HOA’s attorney. If you decide to sue your Association, you (or your attorney) must either prove that the board’s or manager’s actions were unreasonable or done in bad faith. Neither standard is clearly spelled out in the law or governing documents.
And, finally, state law does not specifically obligate an Association-Governed Community to uphold its maintenance responsibilities, as spelled out in the governing documents. For example, there is no law that mandates an Association to maintain the common elements and common areas to a minimum standard for health, safety, or habitability. Nor does state law require HOAs to maintain common areas to the same aesthetic standards that are required of individual property owners.
One exception: homeowners and residents quite often prevail on Fair Housing complaints, because federal law is quite clear and unambiguous on matters of disability accommodation and discrimination against protected classes. However, there’s such a backlog of fair housing claims that it can take several years to resolve, and, during that time the resident often moves in order to improve living conditions.
Sometimes, even when you win, you lose. After several years and appeals, you might prevail on your case, or at least end up with a fairly good settlement offer. But by the time you deduct legal expenses for the attorneys, you may find you’re not that far ahead of the game. In fact, the net amount of your award or settlement may not even cover your total damages, especially if your property has been devalued, sold at a loss, or lost to foreclosure.
And you may think that a judge will order the HOA to pay your legal costs. But don’t count on it. First of all, not all state laws have a “loser pays” provision. And even if your state law does stipulate that the prevailing party is entitled to reimbursement of attorney fees, a judge may find that you only partially prevail, or that both parties prevail on different issues. If that’s the case, both parties will still be covering a good portion of their own legal expenses.
So…what to do?
There’s no doubt about it. Engaging in litigation with your Association-Governed Community is not something you should take lightly.
Don’t just take my word for it. Read through the following personal accounts of homeowners and residents who have lived through the ordeal.
Then make your own decision about how to best handle your HOA dispute.
I encourage you to share this page:
• with other property owners and residents in Association-Governed Communities,
• your family and friends
• anyone who may be contemplating purchase of a home in a HOA, condo or cooperative association, and
• your state and federal elected legislators.