1. Home
  2.  » 
  3. Breach Of Fiduciary Duty
  4.  » Is Legal Action the Solution to Your Homeowner’s Association Dispute?

Is Legal Action the Solution to Your Homeowner’s Association Dispute?

by | Feb 14, 2023 | Breach Of Fiduciary Duty, Business Litigation, Real Estate Litigation

Buffington Law Firm’s Homeowner’s Association litigation attorneys have handled a wide range of homeowners’ disputes; i.e. disputes between homeowners and their Homeowners’ Association (“HOAs”).  The threshold question that always presents itself when our Firm provides a Free Legal Consultation is whether the legal system is the preferred means of dealing with a given dispute.  This is not always the case.  Sometimes a homeowner is very unhappy with his or her HOA and discusses with us several examples of just plain bad governance by the HOA.  The examples are limitless.  Sometimes, for example, an HOA does a poor job maintaining the common area.  Other times an HOA does not enforce Covenants, Conditions, and Restrictions (“CC&Rs”) with sufficient rigor.  By law, HOAs are run by their Board of Directors (usually, but not always, advised by a property management company) and the Board is made up of homeowners in the association who run for the office.  The Directors make decisions, usually by majority vote and it is certainly the case that some of these decisions are poorly done.  Such is the human condition.

However, courts will not simply “second guess” the decisions of the Board of Directors.  Courts apply a legal presumption that the Board has a better understanding and knowledge of the issues in the community than does a court.  Thus, courts will not simply override a decision by a Board of Directors that the court may disagree with.   This principle has been established by legal caselaw, including the case of Lamden v. La Jolla Shores Clubdominium HOA [(1999) 21 Cal. 4th 249].   In Lamden, the California Supreme Court established a legal doctrine whereby so long as an HOA Board of Directors acts in good faith for the best interests of its members, a California court will not override the Board’s decision with the Court’s own judgment.  This is similar to (but not the same) as the “Business Judgment Rule” and the Lamden doctrine of judicial deference is sometimes referred to as such.  In practice, the Lamden rule is a high hurdle for a prospective case to surmount.  The Lamden rule sometimes means that even a decision by a Board that is pretty obviously bad does not have a remedy in the courts.  In a consultation, if our Firm believes that a given case falls within these parameters we will not advise the homeowner that there is a meritorious lawsuit to pursue.  Of course, this does not always mean that we cannot help the homeowner, but it does sometimes mean that.

There are several types of disputes that we almost always conclude fall outside of the Lamden rule and for which legal action may be appropriate.  Some of the major ones are:

  • A case in which the HOA is not enforcing the CC&Rs in a fair and uniform manner for different homeowners.  California law is clear that this is a breach of fiduciary duty.
  • A case in which a Board of Directors member is involved and in which the Board appears to be favoring the director.  Our Firm has achieved good outcomes in quite a few cases of this type.
  • Situations in which a Board simply refuses to enforce a CC&R because the Board “chooses not to become involved in a legal dispute.”  Again, these cases are surprisingly common.
  • Situations in which a Board refuses to hold elections.

What is a homeowner’s recourse if a Board is making bad decisions, but these decisions are protected by Lamden?  The answer is simple: the democratic process.  The law presumes and expects that if a Board of Directors is doing a poor job (and many are) that homeowners will vote them out.  Sometimes a given homeowner’s only recourse is to get involved in the HOA election process.  This is often inconvenient and in the short term, unsatisfying, but sometimes it is, in fact, the only solution to a bad Board of Directors.  Put simply, bad judgment by a Board of Directors is not always grounds for a lawsuit.

If you have a dispute with your HOA Board of Directors, Buffington Law Firm’s legal team invites you to contact us for a Free Legal Consultation.  All consultations are with an experienced HOA litigation attorney and are fully protected by the attorney-client privilege.