These are steps that should be taken when a lawsuit is filed, or when an association, through its board members or management, receives a threat or notice of a claim that may result in litigation:

  1. First, Ensure Proper Insurance Coverage. Your condo association should have insurance coverage in place that will cover legal fees to defend a lawsuit. Consult with an insurance agent who specializes in coverage for community associations when determining which policies are appropriate.
  2. Send Notification of Claim: Insurance Carrier(s) and Attorney. Many associations often contact their insurance providers simply to put the provider on notice that they’ve received a communication which contains a threat of a claim, prior to the filing of actual litigation. Management and/or board of directors should also contact the association’s legal counsel.
  3. Determine if Insurance Coverage Exists. Many claims that are filed against associations and board members may be covered by one or more of the association’s insurance policies. The board should familiarize itself with each policy carried by the association.
  4. Confirm Legal Representation. When a lawsuit is filed, an association’s insurance carrier may assign legal counsel from a panel of “pre-approved” attorneys often used by the insurance company or it may have the right to choose its own attorney. Review this item with association's counsel to determine how legal representation will be handled for the claim.
  5. Vote to Defend Against Litigation. Any time an action is filed against individual board members, the board, the property manager or management company, or the association, the board must take the formal action of voting in an open meeting to defend the litigation.

Click here to read more about handling owner lawsuits in a condominium association.

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