About Litigation
As a member of an Association’s Board of Directors, your Board will have the authority to take legal action, and will, in most cases, be responsible for ensuring that legal action brought against your Association is defended. It is important that the Board understands what is involved in initiating or defending litigation, or an arbitration proceeding, or even engaging in mediation (when arbitration or mediation are necessary or may prove a better alternative to litigation).
- Litigation should not be a “first resort”. Litigation is not something that an association should seek or initiate if there are other alternatives open to the association. However, your Association may have covenants to defend, or contracts to enforce, and may have no choice but to litigate these issues. The Association may also become involved in litigation with state or local government. It is always important that the costs, potential consequences, and possible “downside” of all litigation be considered by the Board of Directors, which may include payment of the opposing party’s attorney’s fees, should the opposing party prevail. For this reason, the Board of Directors should “look before it leaps” and see whether an alternative to litigation, such as mediation, is possible.
- Understand the litigation process and the costs involved. Much of the litigation involving community associations is relatively straightforward. However, some matters may involve complex litigation, and may take a great deal of time and money to achieve the results sought by the Board of Directors. Consult with the Association’s attorney as to what will be involved in the particular case, the costs, evidence, and other matters required to successfully prosecute a case. Remember, when the Board turns the case over to an attorney regarding litigation, the Board’s involvement has not ended, it has, in fact, just started!
- The Association’s “day in court”. While it is true of most civil litigation that a majority of cases do settle, out of court, it is always important to be prepared to go to trial or to a final hearing (if arbitration). This may require considerable time and effort by the Board of Directors, and the Board may have to consider additions to the budget, new assessments, or other assistance and support for the litigation process. The Association, working closely with the Association’s attorney, must make sure everything is ready when the Association has its “day in court”.