How Can Homeowners Handle HOA Disputes?
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Homeowners who live in communities governed by a homeowners’ association (HOA) sometimes run into a unique set of issues they may have to handle. Whether it is rules and regulations that affect the usage and maintenance of the property or troublesome neighbors, the potential areas for disputes to arise are plentiful.
While most of the issues can be resolved amicably, there may be other times when that is not possible. Homeowners then must find the best way to resolve disputes that arise with an HOA without turning the dispute into expensive, time-consuming, and stressful litigation.
Using The HOA’s Internal Process
The first place for homeowners to look when disputes arise between the homeowner and the HOA is the association’s declaration of covenants, conditions, and restrictions (CC&Rs), bylaws, rules, and guidelines. It is common for these documents to provide the internal process for community members to resolve disputes.
For example, sometimes an informal process might start with a meeting between the homeowner and the president of the HOA or other board members. This step allows an opportunity for an informal conversation to determine whether a dispute can be resolved internally and informally. Discussing concerns with the board is often the most common sense and cost-effective option.
However, it only works well when both sides are engaged in rational thought. Unfortunately, sometimes the board members and community members choose to ignore the written guidelines and restrictions and choose to take an unreasonable position concerning a specific issue. In those cases, internal or informal processes do not work.
The internal process might also provide for a second level opportunity to attempt an internal resolution. Thus, both the board and the homeowner must follow the internal process so that if there is action at the next level, there are no procedural issues with how things progressed initially.
Most internal processes are driven in large part by the law of the state in which the community is located. Some states have enacted legislation that provides specific guidelines for homeowners’ associations to follow for dispute resolution, and those guidelines must be part of the homeowners’ association’s internal process.
In states that do not require an internal dispute resolution process, associations typically enact their own internal dispute resolution process and include the same as part of their governing documents.
With that in mind, homeowners need to be familiar with their particular association’s documents, so there is a clear understanding of the homeowner’s rights and responsibilities in achieving a resolution to disputes.
Alternative Means of Dispute Resolution
In cases where the internal process does not resolve a dispute or in situations where there is no internal process provided, the next step may be a process called Alternative Dispute Resolution (ADR).
ADR allows both the association’s board and the homeowner an opportunity to resolve an issue outside the courtroom by engaging in negotiation, mediation, or arbitration.
Mediation involves a third-party neutral who primarily listens to both sides of the dispute and tries to assist the parties in finding a middle ground and therefore achieving a resolution to the dispute at hand.
Mediation is a voluntary process in the sense that no one can force the other side to resolve a dispute in mediation. The parties have to achieve that resolution collectively. Often state law or the association’s documents require the board and homeowner to implement mediation as a means to resolve a dispute before either party can initiate litigation.
Another form of ADR is called arbitration. Arbitration is different from mediation because the decision-maker (the arbitrator) decides how the dispute is resolved after hearing arguments and reviewing evidence from both sides.
Many states require arbitration as a means to resolve disputes between homeowners and an HOA. The idea is to keep these disputes out of court. Very often in cases where arbitration is mandatory, the arbitrator’s decision is final, and the parties are not free to take a dispute to court if they do not like the arbitrator’s decision.
Whether arbitration or mediation is the method of ADR, both options provide both association’s board and homeowners with a means to resolve disputes short of full litigation, which can be expensive, time-consuming, and can create additional rapport problems in the neighborhood.
Anti-Lawsuit Legislation
In the interest of keeping homeowner’s association disputes out of court, many states have enacted legislation that prohibits lawsuits from being filed in this area.
Often these statutes require that homeowners’ associations or homeowners initiate an informal or other grievance or dispute resolution attempt before filing a lawsuit. This is what is known as an administrative filing requirement and is similar to the types of administrative filings that are required when employees want to file claims alleging employment discrimination, for example.
In the State of Indiana, for example, a new HOA statute (HEA 1286) was recently enacted, requiring the HOA and homeowners to follow a formal grievance procedure. A detailed grievance must be put in writing to the affected party, and then the party that is on the receiving end of the grievance may request a face to face meeting within ten days. Under the new law, either mediation or binding arbitration, and whoever does is responsible for the costs. Parties can only file a lawsuit if the grievance process is unsuccessful.
The overall goal of all of these types of statutes is to find ways for HOAs and homeowners to resolve disputes short of full litigation in court. The grievance process makes sense from a variety of perspectives and represents a common-sense approach to finding ways to resolve problems, especially if the nature of the violation is minimal.
How To Find A Mediator or Arbitrator
In many states, there are associations of mediators who run a collective mediation database so that individuals looking for mediators can make contact this way. Many mediators are attorneys, and often lists of mediators are available through various state bar associations.
Homeowners and board members can also visit the American Arbitration Association and AAA Mediation.org for helpful information and resources.
In states that have a governmental department that administers HOA related disputes, they also typically have a list of approved mediators that either HOA members or HOAs can call upon to resolve disputes.
In cases where binding arbitration is required, typically, there is a procedure in place for selecting arbitrators from an approved list where both sides get some input into the process until the choice is narrowed down to a single arbitrator.
Generally, there is information available about how the arbitrator has decided previous cases. Thus each side can have some idea on the arbitrator’s background in terms of decisions.
Where Can Homeowners Get Help?
While the information contained above clearly looks to find ways to resolve disputes before going to court, homeowners might consider consulting with an attorney who is familiar with state law and who can provide advice as to how to proceed first.
Consulting with an attorney may be necessary if there are procedural steps that need to be taken in order to properly comply either with state law or the homeowners association’s rules and regulations.
If a homeowner is not in a position to consult with an attorney, another option might be to contact the state ombudsmen, the agency responsible for HOA administration. Not all states have such a department, however, in those that do (Colorado, Florida, Nevada, Delaware, Illinois, and Virginia), they can often provide homeowners with a wealth of information in terms of processes, procedures, and critical information.
It may also be wise to consult with other fellow members to determine whether there have been similar disputes in the past. It is always essential for both the HOA leaders and members to conduct themselves in a way that will not ruin relationships in the community.