In Houston, property owners associations, or POAs, are common ways that family neighborhoods, condominiums and even commercial businesses organize themselves. Many residents live or work within the boundaries of a POA.
Despite some drawbacks, POAs offer many benefits to the landowners they serve, which is why they are so popular.
A POA is a distinct business organization, which means that it can both sue and be sued. This is why a prudent POA will set up their insurance and risk management program carefully and review the details of their coverage regularly.
POAs, and their leadership team, can face a legal claim under Texas law for a number of reasons.
To give a more common example, if the POA maintains a community center or community pool, and someone gets hurt, they can face a premises liability or other negligence claim.
Depending on circumstances, they may even face liability for a traffic accident that happens within the boundaries of the POA.
On a related point, the POA is potentially liable for the behavior of its employees and, in some cases, even its independent contractors.
A POA’s leadership may also face directors’ and officers’ liability
It may be easy to overlook, but the leadership of a POA may also face liability for their business decisions. For example, the directors and officers of a POA must be careful to follow the POA’s own bylaws and processes.
Likewise, the leadership has an obligation to manage the assessment payments and other funds from its membership properly.
Fulfilling these obligations is not always as easy as it might seem. Leaders of a POA can be faced with difficult questions, and the answers to these questions are often controversial.
A POA may need some legal assistance when facing a legal claim and working with its insurance carriers regarding coverage. Likewise, the POA or the POA’s insurer will want to mount an effective defense to any claim.