The most frequent Directors & Officers claim is one where a homeowner sues the Board for not following the bylaws.
- Do you know where your bylaws are?
- Did you file all amendments with them?
- Did you throw them away after settlement?
Even a Board with the best intentions can interpret the bylaws differently than a homeowner. Consistency is key as you can’t interpret one way for one homeowner and differently for another.
5 Tips to Help Avoid This Claim
- Get the governing documents and all amendments.
- This is easier than it sounds as these documents are filed in the state land records.
- Maryland Land Records can be found at https://mdlandrec.net.
- Delaware Land Records can be found at https://de.uslandrecords.com. (Delaware charges a fee per page)
Keep a copy of the governing documents at each meeting of the Board. When you step down from the Board – hand them over to the incoming Board member!
If the association is regularly disregarding a section of the bylaws, look to amend the document to reflect the way the Board works. Bylaws typically take a 66-2/3% of owners to vote for the amendment, and that is not always easy to get. Make sure it is worth making the change.
If the bylaws are unclear, ask the association counsel to review and give an opinion. Then, act on the opinion of the attorney.
Call your D&O carrier. Most insurance carriers of Directors & Officers coverage have a hotline to call and get free advice. The information is typically on the first page of the policy. Call your agent if you need help finding the hotline number for your insurance carrier.
Following the bylaws will help the association run smoothly. Bylaws are also useful as doorstops, paperweights, and a cure for insomnia. Try to keep yours around!
