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    The Greater Williamsburg area is an exciting place to live and work, especially because of the large number of entrepreneurs who have built businesses from the ground up. These entrepreneurs have taken their passion and made it their profession. Many of us want to take that step. Before you begin, you need to think of the type of business entity you want to form. Our attorneys have extensive business experience, from small one-person companies to publicly traded major corporations. Our attorneys are among the leaders in Virginia in the representation of Common Interest Communities. These communities are generally referred to as "homeowners associations," or "HOAs," and "condominium associations." In the greater Williamsburg area alone, we provide legal assistance to nearly 100 associations. Our attorneys have successfully prosecuted and defended a wide array of civil disputes involving community association covenant enforcement, commercial transactions, construction disputes, contracts, real estate matters, boundary line and easement disputes, employment matters, antitrust litigation, copyright violations, administrative proceedings, and estate issues. Real Estate law encompasses a wide variety of matters, and our attorneys have vast experience to assist you. Whether you need assistance with a commercial or residential closing, or you have questions relating to residential or commercial leasing, we provide experienced advice and counsel to our clients. Zoning law can be a complicated maze of statutes and ordinances. We have ample experience in successful applications for rezoning, variance, and special use permit requests. Finally, commercial and residential construction provide special challenges with respect to financing issues and the construction process. We serve as counsel to various financial institutions.

Lawsuits against HOAs are expensive and time-consuming for all

A Virginia Circuit Court 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, 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 Court. [UPDATED: The Virginia Supreme Court refused to hear the case, meaning that the Circuit Court’s decision stands].

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. [UPDATED: the insurance carrier lost its appeal and was ordered to pay the HOA $217,308.86 for the attorneys’ fees the HOA incurred].

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

John Tarley

John Tarley

John is the firm's managing partner and chairs the firm's small business, zoning, and litigation practice areas.

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Filed under: Common Interest Community, General Interest, HOA, John Tarley, State & Federal Litigation, Susan B. Tarley by John Tarley

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