THE BEST LITIGATION STRATEGY IS AVOIDING IT
Litigation, like death and taxes, is probably inevitable.
Because anyone can sue anyone for anything, you won’t find many associations that haven’t been sued by someone for something. You can’t make your community litigation-proof. But there are steps you can take to reduce your litigation risks.
The best place to start is with the maintenance of common areas. Maintenance is one of the primary responsibilities of community associations. Allegations that the board has failed to fulfill those obligations underlie many – and perhaps most - of the suits owners file against them. To avoid those suits, boards should:
Take the association’s maintenance obligations seriously. Create a robust maintenance schedule and follow it.
Don’t defer essential maintenance. Be proactive. Unlike wine, maintenance problems don’t improve with age – they become more serious and more expensive to repair. Ignoring leaks, failing to repair or replace ailing or failing equipment increases the risk of damage to owners’ units, increasing the likelihood that owners will sue.
Document everything – owners’ maintenance complaints and the board’s response to them. Evidence that the board was aware of problems and failed to address them will provide ammunition to plaintiffs suing the association; evidence of the board’s good faith and reasonable efforts to respond will strengthen the association’s defense.
Communicate with owners. Encourage them to obtain owners’ (HO6) insurance policies, which will pay the master policy deductible on a covered claim for damage to the owner’s unit. Explain how insurance works in a condominium community. Owners sometimes sue because they don’t understand the process, don’t understand what the master policy does and does not cover and have unrealistic expectations for how their claim will be handled and how they will be compensated.
Maintenance and insurance-related complaints are a leading trigger for suits against associations, but by no means the only one. Other potential litigation minefields include:
Fair Housing
State and federal laws prohibit rules discriminating against children and require associations to offer “reasonable accommodations” or modifications to residents with physical or emotional disabilities. The litigation risks in this area are extensive. Boards should be aware of the risks and of the frequent need for legal advice when dealing with them. Two specific suggestions: Adopt policies and procedures for handling Fair Housing-related accommodation and modification requests and never include the word “children” in rules restricting access to amenities.
Rules Enforcement
You could write a book about litigation risks related to rules enforcement, so I’ll offer just a few suggestions here:
Understand the board’s authority and the limits on it. Adopting rules for which the board lacks the authority will almost certainly trigger litigation.
The rules the board adopts should target specific problems and should be no more restrictive than necessary. The more intrusive and restrictive the rules, the more likely they will be challenged.
Enforce rules consistently and even-handedly and document their enforcement actions. Inconsistent enforcement can expose the board to charges they acted arbitrarily and unreasonably– a risk boards definitely want to avoid. Inconsistent enforcement may also lead some owners to ignore the rules, which may in turn compel the board to sue to enforce them.
Risk Reduction
There are some risk reduction strategies that apply across-the-board. Boards should:
Communicate with owners. There is no more effective litigation preventive than this. Let owners know what the board is doing and why. Answer their questions. Respond quickly to their concerns. Owners sometimes file suit because they decide, rightly or wrongly, that it is the only way to get a response from the board.
Be careful about what they say and how they say it. Avoid personal attacks. Ill-considered statements made in a meeting or in an e-mail communication can trigger libel actions or other litigation. Trustees should be very careful about what they say in writing.
Manage disputes carefully. Defuse them if possible before they escalate beyond the point at which they might be settled. Listening to complaints can go a long way toward resolving them.
Never approve special treatment for themselves or the units they own. Preferential treatment, or even the appearance of it, will anger owners and often trigger litigation.
View litigation as a last resort. Consider the costs and benefits of any potential legal battle – not just the financial cost, but the damage created by negative publicity and the loss of trust and good will in the community. Avoiding litigation is almost always in everyone’s best interest. It’s not always possible, but it is always worth the effort.
If would like to discuss litigation avoidance or possible litigation matters affecting your community, please contact Christopher Matheson.