Former homeowners' association director held liable: must repay €45k

A former HOA director from the Hague region must repay €45,000 to the HOA. The court found him guilty of wrongfully collecting insurance money and then spending it without being able to account for it. That money must therefore be returned to the HOA. In addition, he is liable for nearly €6,000 in legal costs. This is evident from a recently published judgment (ECLI:NL:RBDHA:2025:21386) of the District Court of The Hague.

Liability of the HOA manager or board

The director of a homeowners' association is obliged to perform his duties properly towards the association. This is obvious, but is also stipulated in Articles 2:9(1) and 5:124(2) of the Dutch Civil Code. If the director acts in such a way that he can be seriously blamed, he is liable to the HOA. This follows from the judgment of the Supreme Court of January 10, 1997., ECLI:NL:HR:1997:ZC2243. The question then, of course, is when a serious accusation can be made. That depends, among other things, on what could be expected of the director. In the case before the court in The Hague, more could be expected of the director in any case. This is evident from the judgment.

Insurance money transferred to director's bank account

To begin with, things went wrong with the way the director handled the insurance money that was due to the owners' association. After damage had occurred, the man contacted the owners' association's building insurance company without informing the members. He then had the insurance money paid into his own bank account. This meant that the members of the owners' association had no insight into what was happening with the money. This also went wrong.

No accountability by HOA board regarding expenses

The man also failed to account for the expenses. For example, he made payments to the contractor without any authorization from the homeowners' association meeting. This is contrary to the regulations set out in the subdivision deed state. No account or accountability has been provided for those payments themselves. Admittedly, the man has shown that money has been paid to the contractor, but he has not demonstrated for which that has been. It is unclear whether the payments were made in connection with work carried out for the owners' association or for the director's own apartment (which, incidentally, is uninhabitable). In addition:

1. the problems for which the contractor was hired still exist;
2. those problems may have been exacerbated by the contractor's actions, and;
3. it is unclear what exactly was done.

Defendant fails to provide evidence in proceedings

No accountability is provided in the proceedings either. The payments to the contractor include invoices that do not appear in the budget drawn up by the insurance expert. Nor were those invoices submitted in the proceedings. In addition, the defendant stated at the hearing that he did not check the contractor's invoices before paying them. The court therefore concludes that the man spent money from the owners' association without even knowing what it was being spent on. That alone constitutes serious negligence.

Director of the homeowners' association liable

The court therefore concludes that the man can be seriously blamed for his actions. He must therefore repay the full amount he collected from the insurance company to the owners' association. Although the mere fact that he received the money in his own account is not sufficient to assume liability, because the owners' association no longer has access to the money, the man must be able to demonstrate what he did with it. And that is the crux of the matter: the man was unable to do so. The court also noted that it does not matter whether the man was a volunteer: volunteers must also ensure careful financial management. Nor does it matter whether the man benefited from his actions. In fact, he himself seems to be the most disadvantaged because his apartment is uninhabitable after the work was carried out.

Homeowners' association director victim of his own carelessness?

The court therefore clearly shows that what matters is whether the director acted with due care and can account for his actions. The ruling does not explain why the man was unable or unwilling to do so. It appears that he was, in any case, rather careless. Not only did he indicate that he did not check the invoices himself, he also informed the court that he no longer had copies of various invoices. He also said this about invoices that could substantiate his own counterclaim against the owners' association. As a result, he did not submit any invoices or even proof of payment relating to his counterclaim until the hearing. He only did so after the hearing.

Former director must compensate the homeowners' association for damages

The man must therefore damage of the homeowners' association. Because no account could be rendered and because the man could not demonstrate what benefit the homeowners' association had derived from the payments to the contractor, the damage was estimated at the full €45k that the man had received from the insurer. In addition, he must legal interest pay and reimburse the association's legal costs.