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HOA Elections Laws Continue to Complicate Things

I participated recently in a brainstorming session at an ECHO Resource Panel Meeting and presenting was an attorney who just completed a 4 day superior court trial defending an HOA from claims of a homeowner that an election was conducted improperly and should be redone. An expensive ordeal, and although the HOA received a favorable judgment for attorney fees of over $140,000 because the judge deemed the owner's challenge frivolous, there is no guarantee of recovery of the fees in sight.

So who wins?

Good question. In this case one might ask what attempts were made to settle and yes, there were apparently some offers made along the way; maybe not enough - or maybe the parties got so engrained that no mutually-agreeable compromise appeared clear to them.

Sorry, I have to ask - wouldn't it have been less expensive on all fronts to agree to do the election over? Would that have made sense? Would the owner even have settled on that once the parties were up to their ears in attorney fees (that certainly does complicate things when it comes to settling)?

Who knows? - no one but the parties involved and maybe they don't know either. Each has been stung in a painful way.

What went wrong for the owner? It was clear after hearing the story that the owner challenged all the wrong things, for the wrong reasons, instead of challenging the one thing he might have won on .... that the election rules were a problem, not consistent with the law. (They were written by a board president with no HOA law training, attempting to save the association money - how sad is that?)

What went wrong for the association - they did not have to do the election over, right?
Well ... that's right, if you feel victorious on principle.

What if the HOA cannot collect the judgment? What if the owner turns up "judgment-proof" meaning he has no equity in his home or other assets to "attach"? What if he/she caused all this furor and then files bankruptcy?

It happens.

You can see how there can be a "no win" situation and while it might seem easy to second guess either party, HOAs are faced every day with owners who object to the elections processes - and the law is complicated enough that not even all attorneys agree on how to apply it. Owners are faced every day with mom and pop boards who - to save money - either ignore the law or write their own rules, without any comprehension as to what the law says, when the law controls, or when the documents control.

In this case, it was not the poorly written rules (by the board president) that ultimately did in the association - but they were the catalyst for fighting among the parties. And what it ultimately came down to was a "perfect storm" if you will - a board tight with the dollar enough to wait until it was too late to get the right kind of election advice, the owner's vehemence with questions about the election and his ultimate vengeance in trying to prove he knew what was right, and poorly written legislation. What a surprise ... Not!

Stay out of the eye of the storm. Get help from professionals who have experience and education in this area, who can understand the nuances of the election law and who can guide you as client through the maze of what makes sense to challenged, and what doesn't. What is worth fighting for and what isn't. And how to do damage control instead of igniting the fire when an unhappy owner is charging forward like a bull in the streets of Paloma.

And one more thing - mis- or over- use of email can bite! How many times have I said that? In this case the reason the trial lasted so long, apparently, was because of painful line by line scrutiny of over 300 "uncomfortably embarrassing" emails slung back and forth without any regard to who might eventually be reading them. How many times have I said that any email you send might end up being read by: the wrong person, the opposing party, an embarrassed person, a judge, God, and .......... your mother!

There are many lessons to this particular story that will be shared either here or in the monthly E-Newsletters in the coming months, all about how not to do things. Difficult trials can become great teachers. Too bad it is such an expensive education.

There will be more here and also more-than-likely in an upcoming free E-newsletter titled "What's New In HOA Land." You can sign up for free, you know, on the web, at www.californiacondoguru, main page. Look for the sign-up op and stay tuned! Also, check out my other blog at www.condolawguru.com to see what you might expect (and not like) from owners who think they know more than boards about the law (some do).

Full post as published by California Condo & HOA Law on September 19, 2010 (boomark / email).