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DavidC
(North Carolina)

Posts:4

07/04/2006 11:58 AM
I am in an HOA in NC, technically held as "fee simple" but similar to a condo association. We have been discussing amending our declaration to require an "alternative dispute resolution process" in disputes between the HOA and members. Possibilities are a requirement for mediation prior to initiating a court action or a requirement for the parties to accept mandatory binding arbitration. I am wondering whether other HOA's have these features in their governing documents and what their experinces have been. Any examples of wording of the relevant clauses would be helpful. Thanks, David Clements

NiaR
(North Carolina)

Posts:13

07/07/2006 4:36 PM
Hello David. Did you ever find a solution for your dispute resolution issue? I am in similar situation with my HOA where there are not exercising any dispute resolution or mediation process for homeowners. All advice is welcome. Thanks Nia in NC

DavidC
(North Carolina)

Posts:4

07/07/2006 4:49 PM
I am not sure yet whether this would be breaking new ground or not. I still haven't heard from any other HOA that has this in place. I will ask on another list (www.cohousing.org) as well. David

RogerB
(Colorado)

Posts:3725

07/07/2006 4:56 PM
FYI Colorado Senate Bill 06-89, statute 38-33.3-124, passed May 26th addresses this. "(1)(a) The cost, complexity, and delay inherent in court proceedings make litigation a particularly inefficient means of resolving neighborhood disputes. Therefore, common interest communities are encouraged to adopt protocols that make use of mediation or arbitration as alternatives to, or preconditions upon, the filing of a complaint between a Unit Owner and Association in situations that do not involve an imminent threat to the peace, health, or safety of the community. (b) Each Association shall adopt a written policy setting forth its procedures for addressing disputes arising between the Association and Unit Owners. The Association shall make a copy of this policy available to Unit Owners upon request."

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

NiaR
(North Carolina)

Posts:13

07/07/2006 6:00 PM
Very helpful. Thank you. Nia in NC

DonN
(Michigan)

Posts:242

07/12/2006 8:48 AM
Don't underestimate the complexity of ADR. You could end up litigating the arbitration or mediation process. It has to be done well and provide members a low-cost and effective way to resolve disputes with the board. The board doesn't need assistance, since the board uses the association's funds for attorney fees and litigation — part of the tipped playing field. Maybe the most important consideration is for the association to pay the cost for ADR the same way a municipality pays for courts. This levels the financial playing field and will encourage the board to settle the matter to avoid the ADR costs. A second question concerns acceptance of the findings. Unless either party files with the circuit court within a short specified time, the ADR findings shall be binding on the parties. The broader question is enforcement which can be a complex legal question. Hence, the arbitrator or mediator must be qualified to correctly interpret the governing documents, the applicable statutes, and the common law. If there is only a question of fact, ADR can probably be straight forward. But if there are questions about how the facts should apply to interpretation of the governing documents, that is another question. The criteria for interpretation can be complex and ladened with common law. In a recent case in Michigan for example, (DAVID RIBICK V INVERRARY LLC), the court of appeals restated the standard for interpreting CC&Rs as “Restrictive covenants are to be read as a whole to give effect to the ascertainable intent of the drafter,” Mable Cleary Trust v Edward-Marlah Muzyl Trust, 262 Mich App 485, 505; 686 NW2d 770 (2004), citing Borowski v Welch, 117 Mich App 712, 716; 324 NW2d 144 (1982), and strictly construed against grantors and the parties seeking to enforce the covenants. All doubts are to be resolved in favor of the free use of property. O’Connor v Resort Custom Builders, Inc, 459 Mich 335, 341-342; 591 NW2d 216 (1999); Stuart v Chawney, 454 Mich 200, -5- 210; 560 NW2d 336 (1997). Courts should not infer restrictions that are not expressly provided for in the controlling documents. O’Connor, supra at 341, citing Margolis v Wilson Oil Corp, 342 Mich 600, 603;70 NW2d 8111 (1955)." Each state likely has different common law. Bylaws are generally subordinate to the CC&Rs. The board's authority to write rules may have a very tricky interpretation. All of these are likely governed by common law which varies from state to state. Part of a good ADR process for an association would be a document that describes the law, applicable common law, etc. so that all can be working from the same standards. I have provided some discussion about Enforcement Considerations at http://swagman.typepad.com/poa_governance/2006/02/enforcement_con.html#more. This post contains links to information about ombudsman in Florida and Nevada, and a process in Montgomery County, Maryland, that seems to work well. The Colorado Senate Bill 06-89, statute 38-33.3-124, is woefully inadequate. It may be worse than nothing since it creates the appearance of addressing the dispute resolution issue. but lacks the requirements to be effective. It is motherhood and apple pie. If the HOA creates a good process, the results may be okay. The law lacks the specifics to ensure a good ADR process that is low-cost and effective for individual property owners. Don Nordeen Governance of Property Owners Associations http://swagman.typepad.com/poa_governance/

Don Nordeen Governance of Property Owners Associations

DavidC
(North Carolina)

Posts:4

07/13/2006 4:39 AM
Thanks for the references, Don Nordeen. The Montgomery County booklet is very complete and useful (at least the half I have read.) David Clements Westwood Cohousing Homeowners Association, Asheville, NC

DonN
(Michigan)

Posts:242

08/10/2006 1:29 PM
Please refer to my 08/10/2006 4:10 PM post concerning "Colorado: Sample ADR Policies on HindmanSanchez Website" at http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/6578/view/topic/Default.aspx. The policies recommended by HS illustrate the inadequacies in the Colorado law.

Don Nordeen Governance of Property Owners Associations

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