Lawsuits against HOAs are expensive and time-consuming for all

John Tarley, Jr.'s Homeowners Association Law Legal Blogs

Licensed for 25 years

Attorney in Williamsburg, VA

A recent northern Virginia case highlights the expense and time
commitment required when a homeowner sues a common interest community
(referred to as “HOA” in this article). Furthermore, this case
illustrates that HOAs can rarely predict or control when they may be
dragged into a lawsuit.

In this case, Hornstein v. Federal Hill Homeowners Association,
currently pending in the Virginia Supreme Court, a homeowner had her
house for sale with a pending sales contract. Pursuant to Va. Code Ann. §
55-509.5, the HOA provided a disclosure packet that revealed that the
homeowner’s fence was not located on her property. In fact, the
homeowner’s own survey confirmed that fact. The pending sales contract
fell through.

The homeowner sued the HOA in Fairfax Circuit Court for slander of
title and tortious interference with contract, including a claim for
“bodily injury,” and “mental anguish.” The HOA prevailed in the case,
leading to the homeowner’s petition for appeal to the Virginia Supreme

Another battle has been waged regarding whether the HOA’s insurance
carrier had a duty to defend the HOA in the underlying litigation. When
the HOA’s insurance carrier denied coverage and representation, the HOA
sued the insurance carrier. The case was removed to the federal court.
The 4th Circuit District Court agreed with the insurance carrier. The
HOA appealed and the 4th Circuit Court of Appeals reversed the trial
court and held that the insurance carrier had a duty to defend. The
insurance carrier has appealed for a rehearing.

For a brief review, the HOA provided the disclosure packet in
February 2006. After the homeowner’s pending sale fell through, she sued
the HOA in August 2007. As we near August 2010, the underlying case may
be close to resolution, but litigation with the insurance company may
be far from resolving. Based upon the amount of litigation, we can
assume that the HOA’s attorneys’ fees have reached six figures.
Obviously, payment for these attorneys’ fees is then passed onto the
homeowners (unless the case shifts payment of the attorneys’ fees to the
losing party, but even then, courts rarely award the full 100% of the
incurred fees).

Many lessons can be drawn from this experience. Most importantly,
HOAs need to review their insurance policies to make sure they are
covered fully for worst case scenarios. Our experience has shown that
“anybody can sue anybody for anything at any time.” Although the
plaintiff may not win (and did not win in this case), the ensuing
litigation will take abundant resources. We can help you review your
documents and insurance policies with the necessary professionals to
protect your HOA, and homeowner interests.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

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