Hoa Litigation: Legal Disputes, Enforcement, and Owner Rights

Most litigation initiates when an association attempts to enforce the Covenants, Conditions, and Restrictions (CC&Rs). These disputes often involve architectural modifications, landscaping standards, or parking regulations. Courts evaluate HOA litigation by examining governing documents, statutory obligations, and the scope of association authority. The central question is rarely whether a rule exists, but whether the board has the legal authority to enforce it in a specific manner.

The association's power to levy assessments is its most potent tool. Litigation frequently arises from:

• Special Assessments: Large, one-time fees for major capital improvements such as roof replacement or road repaving.
• Late Fees and Interest: Accrued penalties that can quickly eclipse the original debt.
• Mismanagement of Funds: Claims that the board has breached its fiduciary duty by failing to maintain adequate reserves or misusing association capital.

The board has an affirmative duty to enforce the CC&Rs to preserve property values. In many jurisdictions, courts apply the 'Lamden rule' (derived from Lamden v. La Jolla Shores Clubdominium HOA), which grants judicial deference to board decisions regarding maintenance and repair, provided those decisions are based on a reasonable investigation and made in good faith.

Board members are fiduciaries. This requires them to act with the care that an ordinarily prudent person would exercise.

• Duty of Care: Making informed decisions based on expert advice (legal, financial, or engineering).
• Duty of Loyalty: Acting in the best interest of the community rather than for personal gain.
• The Business Judgment Rule: Courts generally will not second-guess a board's decision as long as it was made in good faith and within the board's authority.

A board cannot choose to enforce rules against one owner while ignoring similar violations by another. This is known as selective enforcement. If a homeowner can prove they were singled out for a violation that is commonly overlooked in the community, the court may invalidate the enforcement action as a breach of the association's duty to act consistently.

In HOA litigation, courts focus on whether enforcement actions were authorized, reasonable, and applied consistently. 

Friction often ignites over:

• Leasing Restrictions: Attempts to ban short-term rentals (e.g., Airbnb) or limit the percentage of units that can be rented.
• Architectural Review: Denials of solar panel installations, fences, or exterior paint colors that the board deems 'unaesthetic'.
• Accessibility: Failure to grant a 'reasonable accommodation' for owners with disabilities, which can lead to terminal exposure under the Fair Housing Act.

Owners are contractually obligated to pay their share of the community's operating costs. When a board passes a massive special assessment without following the voting requirements in the bylaws, the assessment may be challenged in court as an unauthorized act.

Failure to pay assessments triggers a specific legal trajectory:

• Notice of Delinquency: A formal demand for payment.
• Assessment Lien: The association records a lien against the property title, clouding the owner's ability to sell or refinance.
• Foreclosure: Depending on state statute, an HOA may pursue a judicial foreclosure (requiring a court action) or a non-judicial foreclosure (conducted outside of court). This is the 'terminal event' of an assessment dispute.

This is a breach of contract claim. The CC&Rs are a contract between the association and every owner. If the association fails to maintain the common areas as promised, the owner can sue to compel performance or for damages caused by the neglect.

If board members engage in self-dealing - such as awarding a maintenance contract to a family member's company - they have breached their fiduciary duty. Shareholders or owners may bring a derivative action to hold the individual board members personally liable for the financial loss to the association.

• Injunctive Relief: A court order forcing the board to stop an illegal action (e.g., an unauthorized construction project) or compelling them to perform a duty (e.g., fixing a dangerous common element).
• Declaratory Judgment: A judicial statement clarifying the meaning of a vague rule or determining if a board election was valid.

Successful HOA litigation may result in court-ordered compliance, invalidation of rules, or monetary liability.

• Compensatory Damages: To pay for repairs that the owner had to perform themselves because the HOA failed to do so.
• Attorney Fees: Most governing documents contain a 'prevailing party' clause. This means the loser pays the winner's legal fees. This creates massive financial risk; a small fine dispute can result in a significant legal fee award.