HOAs: How to Mitigate Your Risk of Litigation

Running a homeowner’s association can be a very rewarding business, but like all businesses today, it comes with certain legal risks. HOAs can be sued for a variety of reasons, and these types of lawsuits can be extremely costly. Even if the HOA ends up winning the case, the amount of time and money spent on defense makes it something that should be avoided at all costs. Learning how to mitigate this type of risk can set up an HOA for long-term success.

Know the Common Causes of Lawsuits

One of the best things you can do to avoid a lawsuit is to learn what types of things other HOAs in your county/jurisdiction/state are getting sued for. Once you learn about common issues, you can take a proactive approach to ensure these issues don’t apply to you. Some of the most common lawsuits against HOAs include the following:

  • Employees – Like all businesses, an HOA is typically responsible for the actions of their employees. This can include maintenance professionals, landscapers, and more. Taking the time to ensure you do full background checks and extensive interviews to ensure you have high quality employees can reduce this risk.
  • Breach of Contract – You will have a contract with various vendors and service providers, and if you don’t meet the obligations set forth in the contract, you can expect a lawsuit. Making sure you are very familiar with all your legal obligations, and doing everything possible to meet them, is critical.
  • Poorly Maintained Property – If the property(s) you are responsible for aren’t being properly maintained, there is a risk that people will get injured. If they do, you are exposed to a personal injury lawsuit.
  • Poorly Maintained Finances – HOAs have a fiduciary duty to manage the funds that the members pay in a responsible way. If you aren’t using the money in a justifiable way, you may be faced with a lawsuit.

Keep Peace With the Community

In addition to avoiding the most common types of lawsuits, it is also important to do all you can to keep peace with the community you are responsible for. It is impossible to never have a disagreement with some of the members, so you need to make sure you are managing that conflict well. Bringing in a mediator, for example, can help to ease tensions and resolve problems more effectively.

Seek Legal Counsel

Finally, you want to make sure that you are never attempting to make legal decisions without talking to an attorney with experience in these areas. Rather than waiting for your members to sue you before you talk to an attorney, it is best practice to contact Auricchio Law Offices at the earliest signs of trouble. We will be there to help you avoid a lawsuit, or represent you should one take place.

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Auricchio Law Offices

Auricchio Law Offices in Chicago provides a complete range of real estate services. We facilitate residential and commercial real estate transactions, advise and represent condominium associations, and represent property owners in real estate litigation. Whatever your real estate issue, we will work diligently to achieve your goals in a timely and efficient manner.

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