We all know that condominium and homeowner associations sue and get sued all the time. Are there any specific obligations to inform the unit owners that the association has filed suit? Are there any specific obligations to inform the owners or potential buyers that the association has been sued? Believe it or not, the answer depends upon what type of community you live in.
Does the Board Need Permission from the Owners in Order to Sue?
The Florida Condominum Act nowhere mentions that the Board of Directors needs any type of permission from the owners in order to file a suit against anyone for any reason.
On the other hand, in a homeowner’s association Florida Statute 720.303(1) states:
Before commencing litigation against any party in the name of the association involving amounts in controversy in excess of $100,000, the association must obtain the affirmative approval of a majority of the voting interests at a meeting of the membership at which a quorum has been attained.
Why is permission required from owners in one type of community but not in another? Why have two different standards?
Must The Board Disclose the Fact that the Association Was Sued?
For condominiums, Florida Statute 718.119 states:
(3) In any legal action in which the association may be exposed to liability in excess of insurance coverage protecting it and the unit owners, the association shall give notice of the exposure within a reasonable time to all unit owners, and they shall have the right to intervene and defend.
The HOA Statute is silent in this regard.
Why should condo owners have the right to be told that their association was sued and may be exposed to liability in excess of available insurance coverage, but HOA owners not be entitled to know this pretty important information? Again, why two different standards?
Interestingly enough, despite The Florida Legislature recently amending both 718 and 720 in regards to what estoppel certificates must contain, neither statute requires either a condo association or homeowner’s association estoppel certificate to disclose to a new buyer that the association is engaged in any litigation and may be exposed to a judgment at some point in the future. Shouldn’t a new buyer have the right to know that if they consummate the sale, they may be exposed to a special assessment at some point in the future as a result of pending litigation?
Whenever we can, we try to point out the discrepancies between the condo and HOA statutes in regards to a specific topic. Next week we’ll discuss arbitration, mediation and litigation. Wait until you see those discrepancies!