You are most likely a devoted and concerned citizen if you not only reside in a common interest or planned unit development (a CID or PUD) but also are on the board of directors (the “Board”) of your homeowners’ association (HOA). Congratulations on your efforts in keeping your development a pleasant place to live!
However, many residents are hesitant to serve on the HOA’s board. They are concerned that board participation may expose them to legal action. Is an HOA board member personally accountable for the expense of hospital bills and other damages if a homeowner slips, falls, and fractures a leg while strolling on the swimming pool deck, for example, because the HOA is responsible for maintaining the development’s common areas?
The answer is “not very likely.” Although board members are occasionally mentioned in HOA cases, they are seldom found personally accountable. Click here for more.
Why are HOA board members sued — and what happens next
When plaintiffs (or plaintiffs’ attorneys) sue an HOA for injury, they often identify individual board members and the HOA itself. This is a common negotiating approach rather than a genuine perception that a board member is directly responsible for the situation. The rationale is that the possibility of personal culpability will drive a more expeditious or advantageous dispute settlement.
Board members, on the other hand, are normally only personally accountable for HOA concerns if they break a fiduciary obligation to the HOA; in other words, if the plaintiff can demonstrate that the board member acted negligently, willfully, in bad faith, or beyond the board’s jurisdiction. In such a lawsuit, the court frequently judges early on that the plaintiff has not supplied such proof and dismisses the case against individual board members.
See Fiduciary Duties of HOA Board Members for further information on an HOA board member’s fiduciary obligation (and how to avoid breaking it).
How HOA insurance can help board members limit their liability
If you are personally named in a lawsuit due to your acts on an HOA board, the Directors and Officers (D&O) insurance provided by your HOA will most likely cover you. A decent D&O policy will compensate you for any fees and expenditures incurred due to your actions as a board member, including any lawsuit costs. Check with your HOA to see whether it has D&O insurance and, if so, what kind of protection it provides.