Homeowners Can Employ Derivative Actions When Their Board Refuses to Pursue Claims

Frequently homeowners in common interest developments that are controlled by homeowners associations find that their board of directors is unwilling to take legal action that the homeowners want to have pursued. An area where this issue is often debated concerns construction defect claims. Not all association boards are receptive to retaining legal counsel to pursue construction defect claims against the parties who are believed to be responsible for the defects such as the developer of the project, the general contractor, certain subcontractors, and/or design professionals. While there could be legitimate reasons that an association’s board of directors does not want to pursue litigation, there are also situations where the refusal is not in the best interests of the association members. Such refusals can be due to such things conflicts of interest, personal relationships between board members and developer personnel, developer control of the association’s board, and general adversity to litigation and lawyers. What is the recourse for homeowners when their board of directors refuses to pursue an action that the homeowners want pursued?