The firm’s latest Miami Herald “Real Estate Counselor” column authored by partner Evonne Andris appears in today’s edition of the newspaper and is titled “The Costs of Community Association Lawsuits, And How to Avoid Them.” Evonne’s article focuses on the potential impacts of community association litigation, and the benefits of alternative options for resolving association disputes. It reads:
. . . In such an environment where emotions can run high, boards of directors and the owners they represent should always strive to let cooler heads prevail. While in certain situations litigation is a necessary tool to assist in the governance of a community, it is a tool that should be used with the understanding that escalating conflicts into litigation is almost always detrimental for both sides in association disputes, including those who eventually prevail in the matter.
Litigation is a disruptor of community harmony, and it could lead to very public squabbles that often make the local news. Such coverage can have long-term negative impacts for communities with their indefinite online lifespan via internet searches under a community’s name, making them potentially detrimental for property values.
Real estate brokers can also become keenly aware of communities that are rife with conflicts, and they will steer their clients elsewhere. Some lenders will also inquire about pending litigation in their loan pre-approval questionnaires, and they may become reluctant to approve mortgages for prospective buyers in communities involved in potentially significant lawsuits, or in those that regularly attempt to enforce their rules, policies and decisions through litigation as opposed to other forms of dispute resolution.
Indeed, the toll suits can take on communities can easily snowball and become very severe. Such litigation can be very taxing on associations’ finances, and it can occupy a great deal of directors’ attention and perhaps even cause some good directors to discontinue their board service to the detriment of the community. Many associations have difficulty filling their board seats with effective and devoted directors, so early resignations and retirements of good directors can really set communities back.
In addition, due to the sensitive and confidential nature of some lawsuits, the details of a case and a community’s legal tactics may not be able to be disclosed and discussed during the open forum of the regular meetings. The secretive nature of some cases can create logistical nightmares for directors and property managers, and the likelihood of a lawsuit stoking the community rumor mill will almost certainly be high.
For unit owners who sue their association, they should do so with the understanding that they are ultimately suing themselves and their fellow unit owners as shareholders of the association. If they prevail and the damages are not completely covered by the association’s insurance, the costs will be borne by all the owners. They can also do significant and lasting damage to their own property value as well as those of their neighbors, and they are often shocked to learn that they could be on the hook for the association’s legal costs if they do not prevail with their suit.
For many types of the most common condominium association disputes, Florida law requires that they first be submitted for arbitration before the Division of Condominiums under the state’s Department of Business and Professional Regulation. This is almost always the most efficient mechanism for the resolution of such clashes, and both sides would usually be very well advised to let the matter end there. . .
Evonne concludes her column by noting that association attorneys typically counsel their clients to resolve the vast majority of their disputes without resorting to litigation. She suggests that by heeding such advice and turning to the state-sponsored proceedings, or other forms of dispute resolution such as mediations for HOAs, as the final arbiter for most association cases, directors and unit owners can avoid the potentially significant risks, costs and disruptions of litigation.
Our firm salutes Evonne for sharing her insights into this vitally important topic for community association directors as well as unit owners with the readers of the Miami Herald. Click here to read the complete article in the newspaper’s website.