Homeowners’ Associations (HOAs) play a crucial role in maintaining a neighborhood’s community standards and overall well-being. However, they are not immune to legal troubles, and many HOAs are embroiled in lawsuits due to common issues that can often be avoided.
As board members or managers, understanding these potential pitfalls and working with experienced HOA lawyers like our team, Manning & Meyers, in Dallas, TX, can help your association navigate these challenges effectively.
Breach of Fiduciary Duty
One of the most significant legal risks for HOAs is the breach of fiduciary duty. According to the Texas Property Code 82.103, all officers and board members are fiduciaries of the unit owners. This fiduciary relationship imposes duties of care, loyalty, and adherence to the scope of the fiduciary relationship.
Duty of Care
Board members must make informed and responsible decisions. This involves conducting thorough research, seeking expert advice when necessary, and acting in the best interest of the community.
Duty of Loyalty
Avoiding conflicts of interest is paramount. Board members should not engage in activities that benefit themselves at the association’s or its members’ expense.
Scope of Fiduciary Relationship
Board members must act within the powers granted by the association’s governing documents and relevant laws.
Homeowners can sue for breaches of these duties if they believe that the board’s actions or omissions have harmed their interests. An HOA lawyer can provide guidance on fiduciary responsibilities and help implement policies that ensure compliance.
Failure to Enforce Covenants, Conditions, and Restrictions (CC&Rs)
CC&Rs are the backbone of any HOA, detailing the rules and standards that homeowners must follow. Common CC&Rs include restrictions on property use, appearance, and maintenance. When an HOA fails to follow through with CC&R enforcement consistently, it can lead to disputes and lawsuits from homeowners who believe that their property values are being negatively impacted.
Examples of CC&R violations include:
- Parking boats or RVs in driveways
- Erecting unsightly structures
- Neglecting property maintenance
To avoid legal trouble, HOAs must enforce CC&Rs uniformly and fairly. An experienced HOA lawyer can help draft clear, enforceable CC&Rs and develop enforcement procedures that stand up to legal scrutiny.
Negligence in Maintaining Common Areas
HOAs are typically responsible for maintaining common areas such as parks, swimming pools, and clubhouses. Negligence in maintaining these areas can result in accidents and injuries, leading to costly lawsuits.
While we’ll gladly represent the association in court, it’s always best to mitigate the risk of any negligence claims.
Some of the easiest ways to avoid these issues include the following:
- Regularly inspect common areas for potential hazards
- Promptly address maintenance issues
- Keep detailed records of maintenance activities
Disputes Over Elections and Governance
Disputes over elections and governance are another common issue that can land HOAs in legal trouble. Homeowners may challenge the validity of board elections, alleging procedural errors or unfair practices. Governance disputes can also arise from disagreements over the interpretation of bylaws or the conduct of board meetings.
Minimizing these disputes is simple as long as your board follows transparent and fair election procedures, ensures that bylaws are clear and up-to-date, and maintains open communication with homeowners.
Financial Mismanagement
Financial mismanagement is a serious issue that can lead to lawsuits against an HOA. This includes improper handling of funds, failure to maintain adequate reserves, and lack of financial transparency. Homeowners may sue if they believe that the board’s financial practices have caused financial harm to the association or individual members.
Our HOA attorneys can help establish financial policies that comply with state laws and protect the association from financial mismanagement claims.
Keep Your Association in the Clear With Manning & Meyers
No matter what, you always want your HOA to maintain a pristine reputation. A great board and excellent legal support from HOA lawyers are the backbone to keeping your association out of legal trouble.
At Manning & Meyers, we have the experience to provide guidance surrounding any legal hurdle your association faces. By working closely with our legal team, your associations can develop policies and procedures that minimize legal risks and ensure compliance with state laws.
If your HOA needs legal assistance, contact us to schedule a consultation and protect your association’s interests.