Without suing, owner is locked in a losing battle with HOA board
Question: Eleven years ago, I bought the perfect town home. I read all governing documents, attended board meetings, talked to owners, then closed escrow. After I moved in, the board fined me for something preposterous. I paid it to get them off my back.
Since then, reserve accounts have been depleted and special assessments reign. There’s perpetual maintenance going on, but nothing gets fixed. I’m acting as my own attorney in a dispute with the board, which stays in power because of inertia and a complicit management company.
My home has become a paper jungle of file cabinets, faxes, copy machines and chalkboards. All my savings have been spent fighting this association, and I lost my job because of it. I want to sue the board but can’t afford it. How did I get in this mess and what can I do about it?
Answer: Perhaps you were too focused on the perfect town home and not enough on pre-purchase diligence about the homeowner association’s functioning. Concentrating on tenure of the board, management, accounts payable and receivable, turnover sales, maintenance issues or the lack thereof might have proved more valuable in making a decision on whether to buy.
Before committing to a purchase, buyers need to realize that nothing stays the same. Governing documents could change during escrow or after purchase and nothing prevents owners from being fined after newly moving in.
Upon realizing there were problems, you should have catalyzed joint action with like-minded titleholders to effect meaningful change without litigation. If self-help efforts don’t work, regroup and try again. This is usually impossible once you get into the court system, making litigation a riskier option.
When a lawsuit is contemplated, effective litigation starts strategically: Owners carefully and quietly gather evidence while evolving a plan and maintaining a low profile. Documentary evidence is crucial and far more effective than proving who-said-what-when.
Low profile means not telegraphing your potential suit; that can cause a board to alter its public behavior and become more oppressive toward you, as well as to hide, fabricate or destroy evidence.
Threatening litigation is rarely effective against business entities or bad directors. Not only are bad boards accustomed to such threats, they also can defend against litigation with the association’s deep pocket or insurance.
Even if an insurer believes that a board’s liability is not covered, it may still defend with a reservations-of-rights, which means that it will seek to recover its legal expense from the association regardless of the outcome. Against such resources your threats stood to have little effect, as the past 11 years bear out.
Your long history of threats has not only alerted the board and its counsel to your legal position, but also put most all your evidence in their hands, giving them a big and cheap head start to fashion defenses should a suit be filed.
Given your history, any suit you pursue has become much harder and more expensive. You provided your evidence for free while enabling the opposition to force you into expensive discovery to obtain theirs.
Unfortunately, you bit off more than you could chew, in effect acting as your own lawyer and naively prejudicing your cause.
No doubt early on you thought the right letter would induce the board to see the error of its ways. This rarely happens. Despite more and ever stronger letters, such battles can become an addiction for some titleholders.
This sorry, protracted trail renders the case especially unappealing for all but hourly-fee lawyers. Even so, the extensive history and documentary volume would be a quagmire for any attorney.
Michael Krieger, a Los Angeles lawyer practicing business contract, technology and intellectual property law, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian JD, P.O. Box 10490, Marina del Rey, CA 90295 or firstname.lastname@example.org.