HOA Bankrupts After $1.4M Verdict for Mold Nightmare, Urgent Update

URGENT UPDATE: The condo association, The Highlands at Stonegate, has filed for Chapter 11 bankruptcy after a shocking $1.4 million court verdict over a mold crisis that turned a resident’s home into a “dangerous nightmare.” Judge Robert Lung ruled in favor of Kristina Corcoran, whose health has deteriorated due to severe mold exposure in her townhome, a situation she claims the HOA ignored for years.

In a decision issued in September 2023, Judge Lung stated that Corcoran’s once-idyllic home has become unlivable due to water damage linked to poor maintenance and construction flaws. The ruling reveals that Corcoran, who purchased her two-story home in 2015, began experiencing severe issues just two years later, including persistent water infiltration and a mold outbreak that has left one-third of her residence inaccessible.

Despite repeated complaints, the HOA failed to take action until Corcoran initiated legal proceedings in 2022. By then, the mold had caused debilitating health issues, including infections and neurological symptoms. “She cannot rent out the mold-infested residence and cannot sell it for enough money to purchase a new home,” Judge Lung noted, emphasizing the dire situation Corcoran faces.

In November 2023, Corcoran began garnishing the HOA’s bank accounts in an attempt to secure the funds awarded to her. According to HOA president Sherri Rosselot, this garnishment has frozen $1.2 million in funds, prompting the association to seek bankruptcy protection to ensure it can continue operations and maintain the community.

Rosselot stated in a bankruptcy court affidavit that the HOA has been adversely affected by poor decisions and a lack of transparency, stating, “Our HOA’s bankruptcy filing shows how years of poor decisions and a lack of transparency have hurt our community.” Residents have expressed frustration over the board’s management, claiming that serious construction defects have been ignored, which has led to significant property value declines.

The ramifications of this verdict extend beyond financial implications. Residents like Meredith Norton and others are now voicing their concerns over the HOA’s governance, with many calling for new board elections. “A small group was allowed to make big decisions that affected all of us, and now we’re paying the price,” Norton added.

As of now, the HOA estimates that it or its insurers will need to cover an additional $300,000 in legal fees for Corcoran’s attorneys, further complicating their financial recovery. The association hopes its insurance will cover the hefty judgment, but no timeline for payment has been provided.

Residents and observers are closely watching the situation as they await the HOA’s next steps. The urgency of this case highlights critical issues surrounding homeowner associations and their responsibilities to maintain safe living conditions.

This developing story underscores the impact of local governance on community welfare, and the fallout from this verdict may reshape how residents engage with their associations moving forward. Stay tuned for more updates on this unfolding situation.