Evan McKenzie on the rise of private urban governance and the law of homeowner and condominium associations. Visit evanmckenzie.wikispaces.com for my published articles and services.
According to the FindLaw article, "The Retreat at Twin Lakes' HOA -- comprised of nearly 200 townhome owners -- would likely have to make its members pay "special assessments" to cover a damage award."As the Professor noted earlier at privatopia.blogspot.com/2012/03/hoa-could-be-sued-in-trayvon-martin.html :That would leave the association potentially facing an uninsured judgment that could involve a great deal of money. Who would pay that judgment? Some readers of this blog know that I have been writing about this for some time. The answer is, "the unit owners." This situation has come up several times in California in the Le Parc case, and in the Oak Park Calaveras saga. I talk about these cases in my latest book, Beyond Privatopia.By the way--try and find that responsibility in your CC&Rs. We constantly hear from the industry and the courts that you are stuck with the terms of the governing documents because you should have read and understood them. Fine. But here is an obligation that nobody knows about: responsibility for uninsured debts and judgments of the association. What could the cost per unit be?damage award /200 units = cost per unit$0,100,000 / 200 units = $0,500 per unit$0,500,000 / 200 units = $2,500 per unit$1,000,000 / 200 units = $5,000 per unitI have no idea what the typical judgments are in wrongful death suits, or how this case will end. But there was a recent judgment against an HOA for $3.8 million for simply violating the terms of the contract, not wrongful death. A $3.8 million judgment divided by 200 homeowners = $19,000 per homeowner.The jury in the O.J. Simpson wrongful death suit awarded $8.5 million to the Browns and Goldmans. Divided by 200 units, each homeowner would be responsible for $42,500.Those who say things like "Oh, my HOA isn't bad. It's only $50 a year" should consider the consequences of being bound to some-document-called-a-contract that makes them personally responsible for the debts and liabilities of the HOA corporation, and gives the HOA corporation (and its creditors) the right to foreclose upon your house to collect their obligation to pay the judgment.To paraphrase Ben Franklin, "Those who give up their liberty for the false promise of protected property values will receive neither".
Post a Comment