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October 23, 2007
What Happens If Boards Do Not Follow The Law?
Here is a question recently posed to me:
"Please advise me if there are any consequences for an HOA Board of Directors if the Davis Stirling laws and rules are not carried out. Who would impose any consequences? Who would know? Does being a volunteer board relieve of consequences? Thank you very much."
Answer: There are many consequences in the Davis Stirling Act and being a volunteer board member does not insulate a person from liability. There are protections for volunteer board members that provide insulation in lawsuits if the Association carries the certain amounts of insurance coverage (which by the way are understated compared to industry suggested amounts). The language for this is in Civil Code Section 1365.7.
There are penalties that the Association must pay to members in some cases, which might be attrirbuted to board members ... if the board members ignored the law, for failure to provide records that must be provided (Civil Code Section 1365.2); for failure to follow the election laws (Civil Code Section 1363.03, 1363.04 and 1363.09); for failure to honor the open meeting requirements (Civil Code Sections 1363.05 and 1363.09; and for failure to provide escrow information when requested by the selling owner (Civil Code Section 1368).
The best thing is to follow the law, of course. The next best thing is to have a justifiable excuse ready if you cannot. Impossibility and impracticability may get you somewhere in court if left to defend yourselves, but it is certainly no guarantee.
As for who might know, or bring charges? That would be up to members and the way members find out what is going on is to attend meetings and read association publications, financials, etc. A lot of information is supposed to be distributed each year to members.
Posted by Beth Grimm at October 23, 2007 10:51 PM