Owner(s) v. HOA - who gets the money?

[MTWallet]

What is the name of your state (only U.S. law)? CA

The HOA Board failed to supervise a crooked contractor who either didn't do the work or performed substantially below construction standards and the work has to be re-done. They paid him without checking any of his work. The new HOA board imposed a $5000 assessment per unit to raise the funds to make the necessary repairs that the crooked contractor didn't do or didn't do adequately. If one or more of the owners sues the HOA and the D&O policy is triggered and pays out, who gets the money? Does it matter if the owners sue in a class action?

 

[HomeGuru]

What is the name of your state (only U.S. law)? CA

The HOA Board failed to supervise a crooked contractor who either didn't do the work or performed substantially below construction standards and the work has to be re-done. They paid him without checking any of his work. The new HOA board imposed a $5000 assessment per unit to raise the funds to make the necessary repairs that the crooked contractor didn't do or didn't do adequately. If one or more of the owners sues the HOA and the D&O policy is triggered and pays out, who gets the money? Does it matter if the owners sue in a class action?

**A: the money goes to the HOA in this case.

 

[jim2798]

I am not a lawyer, but I would like to offer some comments as someone who has been a board member for almost 20 years:

►Is there a professional manager involved, to manage contracts? They would bear some responsibility.
►One homeowner could probably only sue for their personal loss, i.e. the
$5k. I don't know if a group of owners could sue as a class. Insurance might pay up, subject to the policy deductible, which might be high. Any deductible or non-covered amount would come out of the pockets of ALL THE HOMEOWNERS ! By law,the directors will not be personally liable as long as they had the proper minimum amount of insurance in place. If FRAUD took place, that could be different, but what you describe sounds like just negligence.
►The HOA should have some recourse against the contractor, but if he is a flake, is bankrupt, or disappeared, that may be a moot point.
►If a claim is made against the D&O policy, the future insurance rates of the HOA may be adversely affected.

My best short term suggestion....get as many homeowners as possible to pony up a relatively small amount of money, and pay a good lawyer for a couple hours of consult time to advise you on possible course of action.