Colorado: Sample ADR Policies on HindmanSanchez Website

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.

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.