One of the most commonly asked questions homeowners have regarding their HOA’s property management company is whether homeowners can pursue them directly for damages.
Why would a homeowner want to pursue legal action against their property management company? A few examples include:
1. Breach of Contract: If the management company fails to uphold its contractual obligations—such as maintaining common areas or handling the HOA's financial matters appropriately.
2. Negligence: If the property management company fails to perform essential duties, like repairing hazardous conditions or mismanages the HOA's funds, leading to monetary damages for the community.
3. Fraud or Misrepresentation: If the management company engages in fraudulent activities—such as misusing funds, falsifying documents, or misrepresenting fees.
4. Harassment or Unfair Enforcement: If the management company selectively enforces rules, harasses homeowners, or discriminates against certain residents.
Who Can Pursue Negligent Property Management Companies?
Management companies are generally acting as agents of the HOA, under the direction of the board of directors. Their contract with the HOA may contain an indemnification provision which would insulate the property management company from liability for actions taken in the normal course of their work. Homeowners are entitled to see their HOA's contract with their property management company by making a request pursuant to Civil Code 5200(a)(4). Thus, generally speaking, unless the property management company acts outside the authority granted by the HOA (e.g., by ignoring the board's instructions) or otherwise engages in illegal conduct, the HOA is likely the responsible party for the errors of its agent (and for pursuing damages on behalf of the HOA).