The Growing Liability for HOA Board Members

Your HOA was sued. Now what? Every Member is impacted by the poor decisions made by a bad BofD. For example, A.R.S. §33-1805 is clear, as a Member you are entitled to review all community records. BofD's are in violation of the Statute when they fail to turn over financial records, email communication, insurance records, management and landscaping contracts, bids or any requested record that would not violate privacy laws. Now guess why a board would withhold docs! Further, Members become finicky about hidden documentation.

It's unfortunate MC's and BofD's are selective when turning over documents. Worse is when the secretary or president hides records in their garage. Emails are as critical as financials as it's there you can find selective enforcement as well as important decisions withheld from Members.

Insurers review documents to find out why the original issue escalated to a suit to determine if a board member intentionally withheld documents particularly when its attorney told them that they needed to comply. In the meantime, attorneys drive up costs delaying the inevitable with quips like: the request is too broad, what do you mean by financial records and other nonsense. After that, the insurer may consider the board members actions were willful misconduct. Depending on how severe, that board member may be stuck with a bill of $5k-$100K of what the insurer paid to defend the board. Now you can begin to understand your liability. If you want on the Board you might make sure you have the money cushion in your savings.

I'll withhold information since the case I'm addressing is ongoing but LaBarre/Oksnee Insurance Agency, License #0C84283 informed a Scottsdale HOA that its former insurer, Liberty Mutual was no longer offering D&O coverage. Since there remained an open D&O claim that had paid out $28K, the new D&O carrier Philadelphia Insurance increased the D&O deductible to $15K due to the claim. Oops ... as a board of director are you willing to risk $15K if not more of your own savings? When they ask you to be a board member, there' plenty they do not tell you. The number one reason potential board members cite for not becoming a board member is liability. You will quiver the moment a Member says "I am going to sue!"

If you have suffered HOA abuse, contact HOATruth.com. Dennis Legere is the principal advocate. Or you can reach me at EarsUp@iCloud.com. Full disclosure, neither are attorneys. We do this bc we don't like bullies. FREE.