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I would confirm you have a D&O Policy. If an owner sues, then its going to be against the board for unlawful decisions, not against the HOA.
I will confirm the D&O policy...
Quote:
Originally Posted by jumper_girl221
Usually a suit against a HOA is due to negligence or something affecting someone outside of the HOA which would be covered by your liability policy.
negligence is a concern in our rules and regulations - for example we say that illegal activity will be reported or roads will be plowed and maintained. We're being counciled to remove this language as we (the board) cannot report all illegal activity nor is it our duty. We cannot ensure roads being plowed/maintained at every moment. So if our 'negligence' in this areas causes another unit owner harm, they might sue the HOA. Or that is my concern anyhow.
Last edited by foxboro82; 12-31-2014 at 11:01 AM..
If the property is mortgaged you will have to get a different loan as an LLC. This will have worse rates and tax benefits as it will be a non owner occupied loan and treated as investment property.
If owned outright it still sounds too complicated to me and I doubt there will be any benefit.
The main benefit to buying a personal residence with an LLC is privacy, but that doesn't apply in this case.
If the property is mortgaged you will have to get a different loan as an LLC. This will have worse rates and tax benefits as it will be a non owner occupied loan and treated as investment property.
That's what I was afraid of. I'll have a mortgage for at least 5 more years.
This all probably sounds worse than it is. Given everything, it isn't a horrible place to live at all. I'm one to try and cover all bases in life and can find the task overwhelming and impossible.
There has been some change in the last two years since I've been on the board. Before, it was just a mutual admiration society of 4 people who did what they wanted and due to lack of interest and/or the disempowerment of the rest of the HOA.
I got on the board by playing nice with the HOA president and then let all heck break loose once I saw the inner workings. ...things are getting better...
for example prohibition of signage on vehicles/attaching decorations to the interior surface of any window may not be enforceable if challenged on First Amendment grounds (given it is not in our bylaws..., only board-enacted rules) ... that sorta thang..
negligence is a concern in our rules and regulations - for example we say that illegal activity will be reported or roads will be plowed and maintained. We're being counciled to remove this language as we (the board) cannot report all illegal activity nor is it our duty. We cannot ensure roads being plowed/maintained at every moment. So if our 'negligence' in this areas causes another unit owner harm, they might sue the HOA. Or that is my concern anyhow.
I would recommend removing that from your rules and regs as well if you were one of my HOA's. If that's in your rules and regs that all illegal activity will be reported, then a drug dealer shoots someone, they could use that as a basis for "it should have been reported".
We have one association with "security", council recommended it be changed to "community patrol" because security implies we are patrolling with the intention to keep the residents safe, and if that fails, it could be argued that it was a lapse in our duties to the owners.
In all honesty, if someone is going to sue, they will. We've seen lawsuits for the most frivolous things...my personal favorite was the guy biking through one of our vacation communities (wasn't staying there) during a cat 3 hurricane with a mandatory evacuation in place. A tree limb fell and landed on his head, he sued, insurance kicked in and he got a fairly hefty settlement. You'd think common sense would say don't bike through a heavily wooded area during 100+ MPH winds when you aren't supposed to be there in the first place....
for example prohibition of signage on vehicles/attaching decorations to the interior surface of any window may not be enforceable if challenged on First Amendment grounds (given it is not in our bylaws..., only board-enacted rules) ... that sorta thang..
Do your bylaws give the board the right to enact rules? Or does it require that all regulation changes be voted on by the membership (rare). Most association doc's give the board the right to enact and enforce various policies without membership approval.
I would recommend removing that from your rules and regs as well if you were one of my HOA's. If that's in your rules and regs that all illegal activity will be reported, then a drug dealer shoots someone, they could use that as a basis for "it should have been reported".
That's exactly what our lawyer recommended.
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