Q: I live on a 3000 acre "Ranch Themed Community" in Kerrville Tx. The ranch assets are collectively owned by the residents
One asset is a horse trail riding operation which has been run on the ranch for 5 decades. The recent HOA board of directors has placed a moratorium on trail rides contending an equine liability / injury lawsuit judgment could be collectively enforced against all the residents of the ranch. The Texas Farm Use Liability Act has been brought to their attention, but they are recalcitrant on their contention. The board is unable to cite a corroborating case supporting their stance. Is there a precedent for an HOA community sharing collective liability for an accident occurring? Our horse program has liability insurance and all the residents have homeowners coverage. Could a litigant sue the board, who runs the horse program, and then go after any of all individual residents?
A:
Ordinarily, to the extent any judgment isn't covered by insurance, it would be satisfied from assets of the HOA. If an HOA does not have the funds to cover a debt or judgment, the HOA typically would then make a special assessment against its members to pay the debt or judgment.
Mind you, this would be true of any debt or judgment for ANYTHING the HOA does or is responsible for doing. A horse trail riding operation has the advantage of the statutory protection of the Texas Farm Use Liability Act. That type of liability protection is likely not available for other things the HOA does like common area maintenance and repairs. Obviously things like playground equipment and swimming pools present a much higher degree of risk than a horse trail riding operation.
Using the board's argument against them, then the HOA should never do anything, or hire any contractors or vendors to do anything, and should not accept responsibility to do anything, because any act or omission by the HOA or its hirelings could result in a lawsuit and could result in a judgment which could potentially subject all of its resident members to a special assessment to pay it.
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