Mediation? Arbitration? Avoidance?! Best HOA Practices for Resolving Conflict
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Did you know? Even a simple email blunder can lead to conflicts in your community.
Sometimes, there isn’t much “unity” in “community.” We’re talking about conflict, and when it arises, it’s never pleasant. But in many cases, it also can’t be avoided.
When it comes to homeowner associations (HOAs) and their members, the hope is that conflict can be avoided with best practices, or that it may be resolved quickly through friendly discourse and good faith.
The last thing anybody wants to face is costly, time-intensive and stressful litigation. To that end, it’s important that board members know the three different types of alternative dispute resolution (also called ADR): internal dispute resolution, mediation and arbitration.
Internal Dispute Resolution comes courtesy of California’s Davis-Stirling Act. The other two, mediation and arbitration, are time-tested methods of ADR, but the two terms tend to get confused with one another, so this article will clear some of that up.
It should be noted that if you have a dispute, it’s always best to speak to a professional HOA management services firm for guidance. Additionally, if legal action is on the horizon, consult your association’s attorney. But before things get that far, speak with an experienced California HOA management company about these methods of ADR.
Internal Dispute Resolution (IDR)
Also called “meet and confer,” IDR is a common-sense approach to resolution where no fees are incurred by either the association or the member. The association may have its own IDR procedure, but in absence of that, it’s pretty simple: One party requests a meeting with the other, in writing. If the request is made by the member, the association cannot refuse. If the request is made by the association, the member does have the right to refuse. Once the board has designated a director to meet and confer, the parties meet at a mutually convenient place. They talk it out, and work in good faith toward a resolution (lawyers may be present at a party’s own expense). Once a resolution is reached, the resolution is put in writing and signed. The resolution cannot conflict with the law or the association’s governing documents.
Mediation can be either voluntary or mandatory, and it’s a go-to method for many parties because it’s as cost-efficient as it is non-adversarial. A mediator is present and acts as a neutral third-party, working with both sides to sort through the issue and arrive at a resolution. The mediator doesn’t choose sides (he or she isn’t a judge, after all); instead, they work to assist both parties to reach an agreement that everyone deems is fair. Of course, you’re not obligated to accept a mediation decision, and either party can leave the mediation at any time. However, if both parties agree to a mediated solution, then the final step is to sign an agreement at the end of the process.
Unlike mediation, arbitration is considered an adversarial method of ADR. In the simplest terms, you can think of it as a less formal version of a trial in court. The process is facilitated by an arbitrator (or more than one), who works as a kind of private judge. Both sides are represented by attorneys, and just as in a court trial, the arbitrator makes a decision after reviewing evidence, hearing sworn testimony and taking into account relevant documentation. The decision may be binding or non-binding – it depends on the type of arbitration agreed upon in advance. If it’s non-binding, the decision can be seen as a professional opinion of the prospective outcome in a potential trial. A binding decision, on the other hand, cannot be appealed and must be complied with by both parties.
What if resolution can’t be reached through any of these processes? The next step is courtroom litigation, complete with judges, juries and attorneys (not to mention high fees and time). Talk to your association’s attorney about any conflicts that arise and find out which course of action is best for you. And of course, the best way to avoid litigation starts with adopting best practices so that you can avoid conflict before it begins. Work with your HOA property management company to learn additional best practices that are specific to your community.
Complete the form to download our Best Practices for Association Board Email and explore additional tips in our article 5 HOA Board Blunders to Avoid. To learn more about best practices in California community management, contact FirstService Residential.