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Observations about HOA Lawsuits from a Litigator’s Perspective
By: Michael G. Oddo
Our firm represents homeowners associations and has done so for almost three decades. My partner has been an HOA practitioner for even longer. Our client list includes hundreds of associations. I, however, am not a day-to-day HOA specialist. I am a less noble breed, a litigator, a trial lawyer. Because of ethics rules, I cannot brag that I am a good lawyer, and even if I did, recall what Charles Dickens wrote: “. . . if there were no bad people, there would be no good lawyers.”[1] My presence in an HOA matter can be a foreshadowing of unpleasantness, like a Mini-Me to the Grim Reaper. I am called upon when initial steps fail to stop “bad people” from ruining everyone else’s block party.
The types of lawsuits I handle for HOAs vary: assessment collections; deed restriction enforcement; defense against homeowner claims for unfair treatment; disputes over proposed construction of improvements, to name a few. Associations experience litigation arising from lien foreclosure proceedings, open meeting requirements, board membership elections, the Fair Debt Collection Practices Act and other statutory causes of action. The list of claim categories is long and growing. I will address common challenges an HOA must hurdle in almost every matter that threatens to land in that unhappy playground called “court”.
In the vast majority of instances in which an HOA board inquires about a lawsuit, the declarations of covenants, conditions and restrictions (“CCRs”) form the basis for the remedy sought or the defense intended. Occasionally, the scrutiny imposed by a high stakes court action exposes flaws and omissions in CCRs. The complex documents that form an HOA, usually prepared at the hands of a land developer, can be many years and several points of reference removed from later disputes. Homeowners who want to operate drones over their property, for example, might argue that nothing in the CCRs prohibits such activity, and they might be correct especially if the CCRs were filed more than twenty years ago. More fundamental flaws might become apparent under the high intensity light of pretrial discovery, such as innocent omissions that support an argument that the CCRs do not attach to certain property that was always considered to be bound. In older neighborhoods, amendments and supplements to the CCRs may proliferate, but without being reconciled to each other or to the original declarations. Bylaws regulating annual meetings or the transition of governing board members are fodder for disputes. If a bylaw fails to clearly define the process for notice, proxies, meetings, or voting, skirmishes can arise between a board and the HOA’s management company on the one hand, and homeowners that claim to have been disenfranchised because their candidate was not afforded a fair election. Injunction lawsuits spring up from CCR and Bylaws inadequacies to stop certain acts from happening that most homeowners take for granted. In all such circumstances, the HOA may win and it may lose, and though most homeowners may not care too much about the outcome, they will take notice if a special assessment is balloted to fund a depleted legal expense budget.
“Some gotta win, some gotta lose; Good Time Charlie's got the blues.”
“Good Time Charlie” by Danny O’Keefe
Take-Away No. 1 – invest in a qualified lawyer’s review of your CCRs and Bylaws now before sticky disputes arise later, and fix what needs fixing.
Here’s a scenario to contemplate: an election between two candidates is hotly, angrily contested. The campaign included name-calling, digging up unflattering history, circulating embarrassing e-mails, etc. After the election, the purported losing candidate and some followers refuse to acknowledge the result and launch a legal challenge. In fact, this same candidate declares victory and takes aggressive steps to prepare for assuming office. Is this a fictional screenplay based on a presidential election, coming as a major motion picture to a theatre near you? Actually, it is a sampling of real events our firm has sorted out for clients.
Issues abound surrounding board elections, management control, authority to bind an HOA, and other aspects of governance. For example: can the president of an HOA board unilaterally hire a lawyer to file or defend against claims involving the HOA? Can a majority of board members contract with a vendor for their HOA without consulting the remaining members? What happens when a board enters into a contract for the HOA, but then the board’s members change after an election and the new board desires to reject the contract? What if one set of board members refuses to recognize the legitimacy of a newly elected set of members, and both factions hire different lawyers for the HOA? The foregoing scenarios can result in bitter, expensive court battles.
For starters, when a law firm represents an HOA, it is representing a legal entity, a “person”, which is separate in the eyes of the law from the board or any individual board member. The client is the association, not the board president or committee that first contacted the law firm. When a law firm represents an association, disputes involving incoming and outgoing board members, the conduct of meetings and elections, proxy battles, contract interpretation – actually, any legal matter – it must advise and exercise independent professional judgment for the best interest of the HOA. At times, the HOA-as-client perspective necessarily means that a lawyer will counsel a position that particular board members or management company representatives will not like. So, what happens if a group of board members splinters off and purports to hire another attorney for the HOA, one who not only opposes the advice of the first lawyer, but also makes a claim against the other board members? The second lawyer is bound by the same principle as the first: he or she must exercise independent professional judgment for the best interest of the HOA, not the dissident group of board members.
Take-Away No. 2 – Before executing agreements with third parties (including law firms), follow the necessary meeting, voting, and corporate formality prerequisites, and record the fact that each mandatory step was completed in the minutes or other HOA records. Take-Away No. 2(a) -- Third parties doing business with an HOA are advised to obtain a formal written corporate resolution signed by the board president or secretary reflecting the authority of the HOA granted by the board to execute the vendor’s contract.
Board members must set aside personal interests and agendas in favor of the best interests of the HOA. If a board member cannot set aside personal preferences to sufficiently give objective input on HOA matters, or if a conflict of interest arises, the board member must abstain from voting. Conversely, other voting members must not yield to one board member’s opinion or demands simply because that one board member is most directly affected by an issue. To the contrary, in such circumstances it becomes even more important that the other board members “speak up” to make sure the best interest of the entire HOA is considered. Otherwise, a board risks becoming the tool upon which a highly motivated individual grinds her ax. A member with personal involvement can lose perspective – especially when pursuit of the form of justice he or she desires is funded by neighborhood assessments.
Although the law and most CCRs are written to reduce the chances of a board member being held personally responsible for acts and decisions made in the scope of their board role, it is never too careful or excessive to inspect each decision through the prism of the best interests of the HOA as a whole. Reasonable people can differ on what is best, but reasonable people must act reasonably, which means without arbitrariness, self-interest, discriminatory motive, or rejection of guiding principles expressed in the CCRs, bylaws or the HOA’s prior course of dealings.
“There's been some hard feelings here, about some words that were said.”
“One Man’s Ceiling is Another Man’s Floor” by Paul Simon
Take-Away No. 3 – Board members should thoroughly understand the standards by which they must discipline themselves when acting in their official capacities.
And now, the elephant in the room. Disputes in America, as well as in any HOA, can lead to lawsuits or threats of lawsuits. Lawsuits bring ne’er do wells like yours truly to the trough. The HOA opponent will have a ne’er do well, too. Ne’er do wells, as they do in society at large, cost the community money. I make no apologies for the obvious, painful fact that I charge for my unique brand of service. Why else would I be willing to jump into your nightmare and slay your dragons? Joking aside, litigation is expensive, distracting, seldom cathartic, but often chaotic and destructive.
I am reminded of the typical news interview of people who stubbornly refuse to evacuate before a hurricane. If they thought about it, they would concede that they have no weapons to thwart the will of water and winds, and they are merely casting themselves as future subjects of a dangerous, costly rescue. My advice to you as an HOA representative: don’t be the equivalent of the guy soon to be stranded with his cat on a rooftop inches away from being overtaken by a storm surge.
I suspect several of you reading this, who have been down the lawsuit path to any degree, are nodding your head in agreement. Those that do not know what I am talking about, heed the warning against fighting in court, especially if you are part of the group that determines if a first punch is to be thrown.
"Litigation is the basic legal right which guarantees every corporation its decade in court.”
David Porter, Microsoft Corporate Vice President of Retail Sales
Of course, despite best intentions and efforts, an HOA may not be able to avoid litigation. If it is sued, it must answer, and hire a lawyer. I am addressing here, however, the decision making that precedes a lawsuit by or against an HOA. If notice letters, liens, meetings and sit-downs with a potential court opponent do not lead to resolution, certainly contact the HOA’s attorney, but not just to flick the first trial domino. You may also learn alternative strategies not yet considered, or that your supposed legal position is not as favorable as first thought (see above regarding CCR surprises). Your attorney can also help your board by being a sounding board him or herself. All of which can result in modestly priced and potentially invaluable advice in order to answer these key questions:
1. Is the desired outcome worth the cost, effort and time of elevating the matter to litigation status?
2. Does the HOA have sufficient funds if the matter becomes drawn out?
3. Are attorney’s fees recoverable by the HOA (or by the opponent, for that matter)?
4. Is the opponent capable of satisfying a money judgment?
5. What are the probable (not just possible) consequences of (a) not pursuing the matter further, or (b) escalating the dispute and running out of money and/or community support before it is resolved?
6. Does the HOA have insurance coverage, including coverage for attorney’s fees, for defense of the pending matter (insurance rarely covers pursuit of a claim by an insured)?
I received some valuable marital advice long ago: “Learn how to handle disputes with your spouse. The relationship is more important than winning an argument. Even if you think you’ve won, you still have to live with the loser.” Neighborhood associations share some of those sensitivities. HOA members must live with the “loser” of a dispute, whether that be an owner or the board.
A competitive, knee-jerk reaction to my comments might include, “What kind of litigator admits up front that compromising is the best policy? We don’t want his attitude on our case. Give us a gladiator – an unchained junkyard dog with blood on her teeth.” However, consider the impact that a Rambo lawyer might have, representing a non-profit neighborhood association governed by a handful of unpaid volunteers. Widen the lens and focus on more than HOA issues for a moment. Ninety-five percent of all cases – from small claims actions involving a few hundred bucks, to billion-dollar patent cases – settle before or during trial. Put another way, an HOA is not giving away any rights or opportunities by being guided by George Herbert’s philosophy: “A lean compromise is better than a fat lawsuit.” Unless the case is one defended and indemnified by insurance, a protracted lawsuit guarantees the HOA will lose, no matter the outcome in court. The time to craft a balanced, sensible compromise and settlement is as early as the board becomes aware that court might be an option. The second-best time is the day after, and the third best time is the day after that, and so forth.
Take-Away No. 4 – Be proactive about hot-button issues and potential conflicts. Use early communications with legal counsel to explore and strategize effective resolutions before litigation. Take no pride in winning every technicality, and no shame in compromising on unimportant details in favor of long-term collaboration and leadership.
CONCLUSION
For every suggestion and admonishment above, there have been and will always be exceptions. Human nature is unpredictable, and humans, not robots, form HOAs. In our practice, when we think we have seen it all, something new and strange is soon presented by a homeowner, a board, the legislature, or all three at once. Hopefully, the perspectives shared in this article by a fellow who is frequently dispatched to wrestle with the new and the strange will help you minimize the cost of lawsuits and maximize the results of your vigilance.
“If there's something strange in your neighborhood --
Who you gonna call? . . . .I ain’t afraid of no ghosts.”
“Ghostbusters” by Ray Parker, Jr.
Michael G. Oddo is a Shareholder and Attorney with Henry Oddo Austin & Fletcher, P.C., with a focus on Property Owners and Community Associations Litigation and Commercial & Business Litigation. This article is made available by the attorney and/or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law; it is not being made available to provide specific legal advice. By using this website and/or article, you understand that there is no attorney-client relationship between you and the law firm publisher or attorney author. This website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. The references to particular sets of events are meant for illustration purposes only and do not constitute opinions, comments, or advice about any specific case whether pending, resolved, anticipated, actual, or partially constructed from actual cases. The author expresses that he is not bound to any particular legal opinion or future professional judgment or decision on the basis of this article.
[1] From “The Old Curiosity Shop”. If you stare at Dickens’s quote hard enough, you will glean two very different meanings, like the picture that presents an illusion of either an old crone or a young woman.
Jul 11, 2025
