Voluntary board members aim to enhance their HOA community’s living standards, which is admirable. But the association may also at times take on tough issues involving sensitive information or controversial subject matter. On occasion, this could put associations, and even directors, in the line of fire for litigation. Directors should possess knowledge regarding actions that may involve legal consequences affecting the organization.
Here is a list of top dos and don’ts intended to help board members prevent and deal with lawsuits in their associations from a defense perspective.
DO – It seems simple to make sure you review and are familiar with your governing documents and understand the governance of your association. Yet there are a surprising number of directors who have not fully read the declaration, bylaws, and house rules. Familiarity of the restrictions and covenants found in these documents help directors handle issues that may come up.
DON’T — If you don’t want written correspondence, including an email, to end up as an exhibit in a court pleading, avoid hitting send. Once sent, emails among board members are public information, often making them discoverable if relevant to a case. If there are any potential legal implications, discussions should be conducted in executive session or with your legal counsel.
DO – If the board has a question about an issue or matter that arises, they should listen to the professionals, whether the property management company, insurance representatives, or general legal counsel for your association. Their advice and opinions come with experience and knowledge of their professions. They also stay current on best practices and trends in their area of expertise.
DON’T – In the event of a claim or lawsuit being filed, don’t discard any documents that might pertain to the case, including emails or documents demanding mediation or arbitration. Association documents should be on a litigation hold to preserve evidence that may be used in the case.
DO – All legal matters should be kept confidential, meaning they should be discussed only with members of the board, its managing agents and its legal counsel. Board members have a duty to keep such information among themselves and not discuss it with anyone outside of the board. Conversations about confidential matters with anyone outside of the board could expose a director to individual liability, which must be avoided.
DON’T – Responding to requests for reasonable accommodations shouldn’t be delayed. Often, complaints filed with the Hawaii Civil Rights Commission deal with allegations of unreasonable delay by associations to approve a request for an assistance animal, for example. Accommodation requests should be treated with priority and communicated as quickly as possible.
DO – Always treat your owners and residents with compassion and kindness. Treat others as you would want to be treated as the saying goes. A little understanding, patience, and “walking a mile in their shoes” can do a long way in keeping relationships peaceful. Many times, disgruntled owners or residents just want to be heard. Practicing good listening and parroting back your understanding of their concern will allow them to feel heard. Then tell them the next step you will take, even if it’s a small one, and follow through. Adversaries are created by being dismissive and can make the nicest people dig in their heels on an issue.
DON’T – Keep a cool head. Many issues escalate to claims because of personal emotions involved which can interfere with a reasonable mind, so don’t take things personally. Do your best to have a thick skin and always remember to do what is in the best interest of the association.
DO – Make sure you enforce your covenants and rules evenly among all members of the association, including board members. Board members shouldn’t get special privileges because they are on the board. As a member of the association’s governing body, you are under a microscope and what you do or don’t do will be scrutinized.
DON’T – If you have a conflict of interest, avoid voting on an issue. A conflict of interest occurs when a director has a direct personal or pecuniary interest not common to other members of the association. If you have a question about whether a director, including yourself, is conflicted, consult with your property management executive or legal counsel for your association.
If an HOA board ever has an issue they think could have legal consequences, the best move is to consult the association’s attorney before taking action.
