What legal options does an HOA have if a homeowner takes legal action against the board?
Answer:
The board should promptly involve counsel and notify its insurance carrier. Appropriate reliance on lawyers, accountants, and property managers can support informed board decisions, but insurance coverage and protection from liability depend on the facts, the policy, and applicable law.
When an owner takes legal action against an HOA board, our firm recommends involving the association’s insurance carrier. Counsel can help the board evaluate the allegations and coordinate its response.
Our attorney also discusses the importance of sound board decision-making and the business judgment rule. A board may need legal advice, accounting assistance, and property-management expertise to address matters outside the directors’ own experience.
Using qualified professionals helps the board make informed decisions and assign specialized work appropriately. It does not automatically eliminate the directors’ responsibilities or guarantee that every action will be protected.
For South Carolina nonprofit corporations, directors must act in good faith, exercise appropriate care, and reasonably believe their actions serve the corporation’s best interests. Reliance on professional advice must also be reasonable under the circumstances.
A homeowner association attorney can review how those standards apply to a particular claim and help the board work with its insurer and other advisers.