“Pending Litigation and Condominium Association Disclosure Obligations” – News-Press
Q: I serve on my condominium association’s board of directors and recently, we were informed that the association had been sued by someone regarding an injury that occurred on the condominium property. The board has questions as to what actions it should take to protect the association’s interests. How should we proceed? (R.E., via e-mail)
A: What any party in litigation must do is dependent on the underlying facts of the lawsuit. As such, we cannot give any direct advice on how to proceed. However, whenever an association is sued, either by a unit owner or a third party, there are a number of general actions it should take.
Anytime an association is served with a lawsuit, it should immediately contact its legal services provider to ensure that a timely response is filed and the association should contact its insurance carriers to determine if there is insurance coverage for the lawsuit.
Further, the association may be required to give certain statutory notices concerning the fact that it is now a party to litigation.
There are certain statutory disclosure requirements concerning pending litigation for associations. For example, the question and answer sheet that the association must maintain pursuant to Section 718.504, of the Condominium Act, and which must be made available to prospective purchasers, requires the association to state and identify any court cases in which the association is currently a party of record and in which the association may face liability in excess of $100,000.00. Depending on the specific facts of any litigation, such litigation may have to be disclosed on the association’s “question and answer sheet”.
Additionally, the association may be required to make certain disclosures to the members. Section 718.119(3) of the Condominium Act provides that if the association is involved in any legal action in which it may be exposed to liability in excess of insurance coverage protecting it and the unit owners, the association is required to give reasonable notice to the unit owners and the unit owners have the right to intervene and defend in the lawsuit.
Finally, the association may be asked to complete a lender questionnaire in connection with the sale of units, and often those questionnaires ask about pending litigation. Section 718.111(12)(e) of the Condominium Act provides that the association is not responsible for responding to requests for information from prospective purchasers or lienholders. However, if the association chooses to respond, it can charge a reasonable fee not to exceed $150.00 plus copy costs and attorneys’ fees incurred in preparation of the response. If the association elects to provide a response, the Act also provides that the association is not liable for providing information if the information was provided in good faith and includes a written statement that “the responses herein are made in good faith and to the best of my ability as to their accuracy.”
Accordingly, there are certain statutory requirements for a condominium association to disclose information regarding pending litigation.
If the association has questions regarding its responsibilities concerning pending litigation or its obligation to disclose such information it should consult with its legal services provider and should do so in a timely manner.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.
