If you are a volunteer board member for your homeowner’s association, you may be wondering if there may be a lawsuit against you for your actions or decisions. While lawsuits against HOA board members are rare, they are not impossible. Here are some tips on how to avoid personal liability and what to do if you face a legal challenge.
What are the common reasons for these lawsuits?
HOA board members have a fiduciary duty to act in the best interest of the association and its members. This means they must exercise reasonable care, honesty and good faith in managing the HOA’s affairs. However, some homeowners may disagree with the board’s actions or policies and file a lawsuit against the board or individual board members.
Some of the common allegations include mismanagement or misuse of HOA funds, conflict of interest or self-dealing. It could also include breach of HOA bylaws or governing documents, libel, slander or invasion of privacy. Alternatively, lawsuits could stem from discrimination or harassment, negligence, wrongful conduct or failure to maintain common areas or enforce rules.
How can HOA board members protect themselves?
The good news is that HOA board members have several legal protections and strategies to shield themselves from personal liability in case of a lawsuit. For example, some states have laws that limit the personal liability of volunteer board members for acts or omissions within their scope of authority, unless they acted with gross negligence, willful misconduct or bad faith.
The HOA’s articles of incorporation, bylaws or governing documents may contain provisions that indemnify board members from liability or reimburse them for legal expenses, unless they violated their fiduciary duty.
The HOA should have a liability insurance policy that covers the board and its members for claims arising from their official duties. Additionally, the board may consider purchasing a directors’ and officers’ insurance policy that covers claims based on negligence, breach of duty, errors or omissions.
What should board members do if sued?
If you are served, you should notify the HOA and its attorney immediately. They will help you review the complaint and determine the best course of action. Notify the insurance company. Cooperate with your attorney. Being an HOA board member can be rewarding, but it is also challenging. By following these tips, you can reduce your risk of being sued and protect yourself from personal liability.