Buying a home is an expensive and deeply personal investment. Aggrieved homeowners may take out their frustrations in a lawsuit against homeowner association board members.
Board members may be sued
HOA board members may be defendants in lawsuits. Their association’s insurance typically covers their liability. But other coverage may be needed for personal negligence where plaintiffs alleged that they engaged in wrongful conduct.
HOA board members hold a fiduciary position. This means they are expected to transact HOA business, especially regarding its finances, with the highest level of integrity.
HOA board members may be personally sued for acting negligently or violating their fiduciary duties. Lawsuits typically involve these allegations:
- Inadequate oversight.
- Misusing or commingling HOA funds.
- Having a conflict of interest.
- Libelous or slanderous statements.
- Privacy violations.
- Failure to pay the association’s debts.
- Illegal housing discrimination.
- Violation of HOA’s bylaws and governing documents.
- Aiding and allowing another person’s criminal or negligent acts.
- Illegal evictions.
- Injuries on HOA property.
The HOA’s liability insurance policy generally covers board members who acted within their scope and duty. Its bylaws and governing rules also afford some protection.
A board member’s homeowner’s policy provides limited protections. However, these policies are usually restricted to actions taken by a private individual and do not cover official board or HOA business.
A directors’ and officers’ insurance policy is similar to malpractice insurance covering professionals such as doctors and lawyers. This policy covers alleged negligence and many other allegations underlying personal lawsuits against HOA board members. Directors’ and officers’ insurance helps prevent personal financial loss or even bankruptcy unless the damages exceed policy limits.
Attorneys can assist individuals with these lawsuits. They can help protect their rights and finances.