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| IHG Insurance (National Insurance Provider) |
| Providing Community Association Insurance for over 25 years: D&O Liability, Crime Products, Umbrella Coverage and Property Manager's Errors & Omissions Liability. |
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hoatalk
Posts:490
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| 08/08/2006 5:10 PM |
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We received this from HindmanSanchez today and it's important for all Colorado associations, since the law takes effect on 1/1/07:
"Signed into law on May 26th, SB 89 requires associations to adopt a written procedure by January 1, 2007, concerning how disputes between owners and the association are addressed. To assist you in complying with this requirement, we have posted three different ADR policies for your use."
You can find the samples at:
http://www.hindmansanchez.com/lawyer-attorney-1134848.html
Best Regards,
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DonN
(Michigan)
Posts:242
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| 08/10/2006 1:10 PM |
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The information at the HindmanSanchez (HS) website illustrates the inadequacies in the Colorado law: essentially no protections for the individual POA member.
HS proposes three different policies for POAs. All are obviously written to protect the interests of the POA, not the individual member. The first is basically nothing, which the Colorado law apparently allows.
The second is labeled an optional procedure, but selected by the POA. An individual member may well have to hire an attorney to understand to possible adverse consequences of entering into an agreement with the POA to use ADR. In the selection of the Mediator/Arbitrator, the owner may well have to retain an attorney to act on the owner's behalf.
The third "is a very detailed policy that provides a mandatory procedure" and is again selected by the POA. Again, a member would likely have to hire an attorney to understand to possible adverse consequences of entering into an agreement with the POA to use ADR. The same is true with regard to the selection of the Memiator/Arbitrator. The policy exempts disputes concerning the governing documents, which are the principal disputes. Those disputes include those concerning the board not adhering to the governing documents. A good ADR procedure cuts both ways.
Apparently, what the law allows is for the rules concerning ADR to be of the association, by the association and for the association. The procedures to be followed should be those developed by third parties who are experts in ADR and developed to be fair to both parties. We wouldn't allow one party in lawsuit to write the court rules. The costs for ADR should be paid by the association as part of providing an independent "judiciary", as municipal governments do, which would provide the motivation for the board to focus on finding a amicable resolution. Preparing for ADR is a major burden on the individual owner. Awarding of costs to the prevailing party is counterproductive to finding an amicable resolution.
As I stated in another post on the Colorado ADR law, it is worse than nothing because it creates the appearance of being helpful to individual owners, when in fact it is the opposite as the HP draft policies so clearly illustrate.
It would be appropriate for a POA to adopt the policies and procedures recommended by third parties who are experts in ADR and how to conduct ADR fairly to both parties. But a law is required, only common-sense actions by the board or the members by appropriately amending the bylaws.
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Don Nordeen
Governance of Property Owners Associations
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DonN
(Michigan)
Posts:242
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| 08/10/2006 1:28 PM |
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| In my 08/10/2006 4:10 PM post above, I forgot to reference my prior 07/12/2006 11:48 AM post on "Binding Arbitration for HOA's" at http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/5254/view/topic/Default.aspx. |
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Don Nordeen
Governance of Property Owners Associations
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RogerB
(Colorado)
Posts:3726
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| 08/10/2006 7:13 PM |
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| Don, you present a valid argument that ADR should not favor one party over the other. However, I think you may have missed the purpose of the Colorado statute. The legislature recognizing the inadequacies of the court system required HOAs to establish ADR Rules and Regs. This provides a member the means to try to resolve disputes at a reasonable cost and within a reasonable timeframe, compared to the only prior alternative of suing. |
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Roger Borcherding
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DARCO Property Management (Colorado)
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DonN
(Michigan)
Posts:242
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| 08/11/2006 11:02 AM |
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Roger, my comments are maybe more negative than I intended. But unless the law specifies that the policy shall be neutral and shall adopt procedures developed by third parties, the attorneys for POAs may write procedures that are favorable to the association and against the interests of the individual owner/member. The draft policies by HindmanSanchez make my point. To provide necessary governance, the governance must include dispute resolution that is low-cost and effective for members. Accordingly, the cost of the "necessary governance" is an appropriate cost for the association. The dispute resolution methods are tilted toward the association and against the member. Having neutral procedures developed by third parties with the association paying the cost helps to level the playing field. The law should also specify that the costs for ADR shall be paid by the association.
We should all ponder why the Colorado law fails to recognize the interests of the individual owner, and level the playing field in dispute resolution. Unfortunately, individual owners don't have a lobby. They have to depend upon the individual legislators who should be the champions for the rights of owners. Individual legislators have been those champions in legislation concerning truth in lending, truth in advertising, freedom of information, open meetings, and other legislation. Let's hope individual legislators will become the champions for an important segment of their constitutents — the individual owners in POAs who pay all the bills. |
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Don Nordeen
Governance of Property Owners Associations
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