Tuesday, October 29, 2013

HOAs and Contingency Cases

A more apt title might be "Why Lawyers Don't Take HOA Cases on Contingency."  

I am frequently asked to take HOA and condo cases on a contingency, but these cases are not the types of cases lawyers can litigate on a contingency, meaning you only pay the lawyer if you win.

Why?  There are no big money damages, that's why.  If they were I would be set for life.  HOA cases are ripe with corruption.  They are unregulated by the State of Florida.  History has shown us when you give people power without any checks and balances you set up the perfect storm for a corrupt dictatorship.  The HOAs, without any state regulation, will do what they feel they need to in order to have everyone follow their rules and restrictions. If you are the homeowner being victimized by the HOA for not being a good citizen and doing what you are told, you feel you have a good case worth a lot of money.  In reality, unless you have sustained physical injuries, you're not going to get a big settlement.

What's the case worth?  If you lucky enough to win, you will be reimbursed "reasonable" attorneys' fees and costs.  You will not get the full amount -- that is rare. Damages in these cases, which take 3 - 4 years to get to trial, sometimes longer, may get you a few thousand dollars, or in extreme cases more, but let's do the math.

Your case will cost $135,000 - $150,000 to litigate (more if the HOA misbehaves during the process and your attorney has to keep busy dealing with "HOA drama" during the case).  Even if you 90% of your fees back that's $121,500 - $135,000.  If you get even $20,000 in damages, this puts you at $155,000 with the lawyer getting 40% (if it goes to trial) or $62,000.  The lawyer will invest $150,000 for three to four years to receive less than half back.  Not a good business for the lawyers.  The HOAs know this, because their lawyers tell them, and their behavior goes unchecked because they know the likelihood of someone suing is slim.  

There are ways to protect yourself from being victimized, but you have to get involved and get your neighbors involved.  If the State of Florida will not keep watch over the HOAs, then it's up to the homeowners.  At least don't make it easy for them to run a dictatorship.

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