Question: I am a condominium owner. Our homeowners association is being sued by a former gardener who claims her firing was an act of sex discrimination. What are the ramifications of this lawsuit for me? Will an insurance policy cover me for any financial loss? I also suspect there may be a political battle going on involving the present board, a former board member and the property management company regarding this problem. Who is liable for damages?
Answer: Sex discrimination is a serious charge if it can be proved in court or by some sort of settlement agreement between the affected parties. Generally, liability does not attach to individual owners in a common interest development, but there is always a risk that it might.
Titleholders owning residential deed-restricted units or "single detached dwellings" located in a common interest development, more often than not, also own a fractional interest in the common property owned by the association. Part of this type of ownership means titleholders share in all the liability, including that which may be in excess of any insurance coverage.
The purchase of a home in an association includes the potential liability for damages whether or not they are covered by the association's insurance policy. Contrary to popular belief, insurance coverage does not pay for "everything." However, Civil Code section 1365.9 provides that individual homeowners are not liable for tort damages when they are sued solely because they are tenants-in-common, or have common ownership in, the association property, provided that the association carries the minimum insurance coverage specified in that code section.