While it’s always best that all parties in an HOA, community association, condo association or other deed-restricted community agree and cooperate, it’s a fact of life that conflicts or disputes may arise. In many cases, the parties can settle their differences amicably and directly through frank and open discussion or negotiation – hopefully, a solution will be reached that resolves the dispute and prevents it from escalating further.
But in some cases, direct conversation doesn’t bring resolution. The next step in the process may be mediation or arbitration – two alternative dispute resolution (ADR) methods that seek to resolve differences without the need for litigation. Not only can mediation and arbitration save both parties the time, money and hassles of a court case, but they also may be required, depending on state laws and/or association documents.
If you have an issue or dispute involving your association, homeowners or other stakeholders and don’t know your options, a good property management company can provide guidance. However, if you are considering taking legal action, it’s very important to consult your association attorney as soon as possible to ensure you understand your legal options, limitations and requirements.
But first, since many people confuse mediation and arbitration, we thought we’d give you a brief overview of what both conflict resolution processes entail and how they’re different.
Mediation, which may be voluntary or mandatory, is considered an effective, cost-efficient and non-adversarial method of ADR. The process is facilitated by a mediator, an independent and neutral party who works with both sides – attorneys optional – to productively discuss their issues and negotiate a resolution. A mediator is not a judge, so rather than choosing sides or determining outcomes, his or her role is to help both parties reach their own settlement agreement that they each consider satisfactory and fair. Neither party is forced to accept a mediation decision and may leave the mediation process at any time if they feel it does not serve their needs. However, if both parties agree with the results, they may sign an agreement at the conclusion of the mediation process.
Arbitration, essentially a less formal version of a court trial, is considered an adversarial form of ADR, is mandated in some states and for certain association types. It is facilitated by an arbitrator (sometimes, more than one), whose role is similar to that of a private judge, and both sides are represented by attorneys. After listening to evidence, hearing sworn testimony from witnesses and reviewing relevant documents, the arbitrator makes a final decision, which may be on-binding or binding, depending on what both sides have agreed to in advance. Non-binding arbitration is basically a professional opinion about the expected result if the case were to go to trial. A binding arbitration is a final decision that cannot be appealed and to which both parties must comply.
If neither of these processes is successful, the next step may be courtroom litigation, involving judges, juries and attorneys. But again, before you take any action, please consult with your association attorney to discuss your situation, options and best practices for dispute resolution. To learn more about best practices in community association management, contact FirstService Residential