Resolving Disputes with Mediation and Arbitration
In an ideal world, all parties in a homeowners’ or condo association would always agree and work well together. In the real world, however, disagreements and disputes are a fact of life. Oftentimes, the parties involved are able to settle their differences on their own through open and honest discussion or negotiation. In the best case scenario, this is done in a civil way and both parties reach a resolution that not only resolves the issue but also prevents it from escalating.
But this isn’t always the case. When conversation doesn’t bring resolution, the next step in the process is often mediation or arbitration. These two alternative dispute resolution (ADR) methods seek to resolve differences without the need for litigation. These methods can save both parties time, money and the hassle of a court case, and in some cases, depending on state laws or association governing documents, may actually be required.
If you have an issue or dispute that involves fellow homeowners, your association or other stakeholders, and don’t know what your options are, a quality property management company can provide guidance. If you are considering taking legal action, it is crucial that you consult your association attorney as soon as possible to make sure that you fully understand your legal options, requirements and limitations.
Before you go that route, and since many people confuse mediation and arbitration, here’s a brief overview of both processes – what they entail and how they are different.
MediationMediation may be voluntary or mandatory, and is often considered a non-adversarial, effective and cost-efficient method of ADR. The entire process is facilitated by an independent and neutral third party – a mediator – who works with both sides to discuss the issues at hand and come to a resolution. A mediator is not a judge, and as such will not choose sides or determine the outcome of the problem. The role of the mediator is to help the parties reach a settlement agreement that each party considers fair and satisfactory. Attorneys are optional in this form of ADR. It is important to note that neither party is required to accept a decision made during mediation, and either party may leave mediation at any time if they feel it does not serve their needs. But if both parties agree with the results, they may sign an agreement at the conclusion of the mediation process.
ArbitrationArbitration is considered an adversarial form of ADR, and is basically a less formal version of a trial. Arbitration is mandated in some states for certain association types. The arbitration process is facilitated by an arbitrator (sometimes more than one), whose role is similar to that of a private judge. In arbitration, both sides are represented by attorneys. The arbitrator listens to evidence, hears sworn testimony from witnesses and reviews relevant documents before making a final decision. This decision may be non-binding or binding, depending on what both parties have agreed to in advance. Non-binding arbitration is essentially a professional opinion about how a case would result if it were to go to trial. Binding arbitration is a final decision that both parties must comply with and cannot be appealed.
If neither mediation nor arbitration are successful, the next step may be litigation in a courtroom, which includes attorneys, a judge, and possibly, a jury. As stated earlier, before you take any action, please consult your association attorney to discuss your situation, options and best practices for dispute resolution. To learn more about best practices in community association management, visit FirstService Residential.