Sued! What Should Our Wisconsin Condominium or Homeowners Association Do NOW?

Condominium associations and homeowner associations are sued every day. These suits can arise based on construction claims, contract claims, negligence claims and various alleged statutory violations – We all know about the Fair House Act! Or the Wisconsin (or whatever state you are in) Consumer Act! Associations seem to attract people who feel that they are entitled to something because they now live in an association. Of course they are entitled to what the law and documents allow them, but for some that never seems to be enough. Often these types of owners or residents make up stuff or read the internet until they find some article or statement that supports their point of view and then cite it as fact. Yes, we have all dealt with those people. However, despite the validity (or lack of validity) of any lawsuit, there are some basic steps that every association should follow once served or notified of a suit. Here is my list of things to consider:

Insurance.
1. Does our Wisconsin condominium or homeowners association have insurance to cover the claim?
2. What will be the negative effects of submitting the claim?
3. What are the risks of not submitting the claim?
4. Does our insurance policy require that all possible claims be submitted?
Response Time.
1. Who will respond for the association?
2. When is the response due?
3. Who does the association need to notify of the suit?
  1. Attorney
  2. Insurance agent/company
  3. Board
  4. Unit Owners
  5. Property Manager
4. What else does the board need to do/consider?
  1. Amend Executive Summary?
  2. Make sure suit is referenced on sale disclosure documents?
Evidence.
1. Where is the evidence?
2. How does our association preserve it?
3. What notices should we send out?
  1. Litigation Hold Notice? – To stop any standard destruction.
  2. Litigation Hold Preservation Notice? – To make sure the evidence is properly preserved.
  3. Litigation Hold Questionnaire? – To obtain a list of what evidence exists and where it can be found.

Lesson. When any condominium association or homeowner association in Wisconsin is sued, taking these basic steps into consideration will go a long way toward winning the suit, or at least not losing it before it even gets started. Evidence destroyed, even accidentally, will be viewed negatively by the court. In addition, depending on the facts, a spoliation of evidence motion or instruction will cost the association a fair amount of money, even if you win the motion or case. So when that lawsuit arrives, take a few moments to develop a plan to preserve the evidence, determine the insurance questions and make sure that you notify whoever needs to be notified. In the end, it will save you a great deal of money.