HOAs have historically thought that they were exempt from liability from their residents. What HOAs and residents need to understand is that there are certain legal theories that HOAs can be potentially held liable. Depending on the state where the community is located and the CC&Rs of the HOA, there are many potential areas where HOAs can be liable to their residents for damages. In order for HOAs to fully protect themselves, it is vital that they carefully review their agreements and determine what areas need to be revised or improved upon. If your HOA is looking to shield itself from further liability with residents, it is important to have a basic understanding of the potential legal liabilities that HOAs can face mentioned below:
Failure to Uphold Maintenance Obligations
One of the primary responsibilities of the HOA is to maintain the common areas of the community. HOAs need to act with a preventative mindset in order to determine which areas may need to be repaired and to schedule those repairs immediately. If HOAs are not careful, they may miss important repairs that should have been scheduled far earlier. If a resident is injured due to an HOA that failed to act, there are many potential liabilities that an HOA could face that could be quite costly to their organization.
The Difference Between Exterior and Interior Liabilities
HOAs and residents do need to understand the difference between the interior of a resident’s property and the exterior. It is quite rare for HOAs to be found liable for issues that occur inside the resident’s home, for example. However, if there are certain roof repairs that need to occur on a condominium and the HOA fails to perform those repairs in a reasonably timely manner, it is possible for a resident on the top floor to claim damages their personal property may have suffered as a result of failing to repair the roof. Generally speaking, HOAs can mainly be found liable for issues that may result from failing to repair common areas or other designations that are specifically mentioned in the CC&Rs for the community as a whole.
Potential Recovery in a Breach of Contract Case
Depending on the nature of the CC&Rs, there are times where a breach of contract case can occur against an HOA. HOAs need to understand their CC&Rs as a contract that binds their organization to any resident that purchases a property in the community. It may be possible for a resident to claim a breach of contract if certain particular clauses of the CC&Rs are not upheld and a resident suffers as a result.
Voluntary duties are an area where many HOAs will be surprised that they can be held liable. If an HOA assumes the obligation to protect their community from crime and they fail to uphold that duty, they could be found liable. This is particularly true if a resident relies on their promise and then suffers a damage as a result. For this reason, HOAs need to carefully have conversations with their board of directors in order to ensure that they are not making representations that they are not able to keep. Should a resident bring a lawsuit, they could be held liable and have to pay damages.
Negligence is something that many residents do try to mention in lawsuits against their HOAs. Negligence is absolutely possible to prove; however, it will require a determination of the particular facts of the resident’s case to determine that the HOA was negligent and the resident’s damages were directly caused by the negligence of the HOA. In situations that are related to common areas, it can be easier to prove a negligence case.
The Benefits of Consulting with an Attorney
There are many HOAs that were established several years ago. After a great deal of time has passed, the potential liabilities of an HOA may shift due to changes in local regulations or issues that their residents face. This is why it is vital for HOAs to seek outside counsel in order to assess what their current contract is with their residents in their CC&Rs. By consulting with an experienced attorney, the attorney will be able to look for potential areas where the HOA could be liable to their residents. By revising certain sections of the CC&Rs regularly, HOAs will be able to shield themselves from many different types of liability. When trying to find the ideal attorney to represent your HOA, consider an attorney or law firm that has established experience in dealing with HOA-related cases. There are many specific pieces of legislation that are unique to HOAs, and it will be necessary to work with an attorney that is not only familiar with HOAs, but also familiar with your state’s particular regulations regarding HOAs and how they proceed with balancing the rights of the HOA and the protection of its residents.
Eric is the Director of Vendor Relations at Elite Management Services. Elite provides community associations with a wide variety of services, including maintenance, accounting assistance, insurance, and many others that require specific vendors. Eric manages the relationships with local vendors so every association gets the highest quality services.