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HOA breach of fiduciary duty

Our community owns their own roads. It costs $500,000 to totally re-do the roads. Sealing is expected to give 10 more years of life (40 vs 30 years with no sealing). Sealing is $23,000/application. This means sealing more often than once every 5.5 years is a waste of money.

Our Board has decided to seal more frequently (every 3 years), which, by the math, is a waste of money. They like the way a freshly sealed road looks, so, to them, it’s all about cosmetics. For many (myself included), however, roads are functional, not cosmetic. And I hate to see my Assessment dollars wasted on cosmetics for something that is functional.

Any thoughts or advice on my pursuing legal action (or recommend other route?) to stop my HOA from wasting my Assessment dollars in this manner?

Thanks for the favor of a response.

2 Responses

  1. dennisl

    Fish7,

    While you have a legitimate concern and I agree with your perspective completely, but the burden of proof will be on you and very difficult relative to breach of fiduciary duty. Have you raised your concern to the board? Do many more people in your community feel the same way about this issue? The standard of care required by the board is that of an ordinary prudent person in the same position and under the same conditions would reasonably come to the same conclusion. There may be many people in your community that agree that the aesthetics are important and are willing to pay for that option. You must understand that the board has no duty to please everyone and only a duty to act in the best interest of the community as a whole. The courts have no desire to impose their will on these community boards and allow them broad leeway in making decisions for their communities. Now if you can determine that their is some financial interest in the company doing the resealing by anyone on the board that is a breach of loyalty and conflict of interest that would be worth pursuing legally. If you find that a large percentage of your community feels as you do, your most logical and effective course of action is to call for a recall of the board and remove the entire board and replace them with someone more in tune with the desire to preserve and protect your communities financial assets than this current board.
    Please remember legal action against the board serves only the attorneys for either side, the association and the homeowners always lose one way or the other. If you win the association will pay your legal fees and their legal fees but that will simply be passed on to all homeowners as increased assessments or use of the reserve fund. The association never wins or loses and the homeowners pay for everything in the end.

    While I am proposing legislation relative to the duty of the board it will be consistent with the advise I’ve provided and case and common law for these communities.

    Dennis

  2. Fish7

    Dennis, thank you for the very informative reply and providing some perspective.

    I’ll work with the community, maybe get a signed petition… see where that goes.

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