Homeowners’ associations (HOAs), like any organization, can face legal challenges. These often come from the community members themselves. It’s crucial for HOAs to understand the typical lawsuits they might face to be better prepared.

Here are the most common legal issues HOAs deal with:

Misuse of Funds
HOAs manage money for community expenses. Unfortunately, this sometimes leads to theft or fraud. Board members might misuse funds, paying for personal items or exclusive dinners. This can lead homeowners to sue for breach of fiduciary duty or other legal violations. Serious cases can result in litigation.

Architectural Request Denials
Homeowners need HOA approval for many home changes. If the HOA denies a request that follows the rules, homeowners may sue. Disputes often arise if a denial seems based on personal reasons rather than guidelines.

Board Action Disagreement
Disagreements with board decisions, especially about spending, can lead to lawsuits. Homeowners sometimes sue to oppose decisions they don’t agree with, hoping to resolve the conflict through legal action.

Discrimination
Discrimination lawsuits are common, especially under the Fair Housing Act or the Americans With Disabilities Act. These cases typically involve claims that the HOA failed to provide reasonable accommodations for disabled individuals.

Failure to Comply with a Request
Homeowners may request to inspect HOA records. If the board denies reasonable requests, homeowners might sue to gain access. However, boards can refuse requests for sensitive information, such as lists of delinquent homeowners.

Failure to Maintain Common Areas
HOAs must maintain common areas. Failure to do so can result in lawsuits, especially if neglect leads to damage or injury. Even with insurance, HOAs need contingency funds for repairs and maintenance.

Personal Injury
Slip-and-fall lawsuits are common. If an HOA neglects maintenance, causing injury, they can be held liable. For example, if damaged stairs aren’t fixed and someone gets hurt, the HOA may face legal action.

Pet Disputes
Pet-related lawsuits can arise when homeowners disagree with HOA pet rules. Homeowners might sue to change rules or seek exceptions, like wanting to keep more pets than allowed.

Rule Violations
When homeowners break community rules, the HOA may fine them. Some homeowners challenge these fines in court, leading to legal disputes.

What Happens When an HOA Loses a Lawsuit
If an HOA loses in court, it often has to comply with the homeowner’s demands and pay legal fees. Without proper insurance, these costs come from HOA funds, meaning homeowners might face higher dues or special assessments to cover the expenses.

Seeking Legal Counsel or Mediation
Legal disputes are common for HOAs. Sometimes the HOA is at fault; other times, homeowners file lawsuits to achieve their goals but are not successful. Either way, legal action can be time consuming and expensive. Another option is mediation. In Hawaii, Section 514B-161, HRS, requires mediation under many circumstances, especially regarding an association’s declaration, bylaws or house rules. In addition Section 514B-162, HRS, covers arbitration. You can view both on legal resource Justia.

Board members should be prepared for any situation by understanding these common legal issues and seeking legal advice when necessary.