How Can Homeowners Handle HOA Disputes?

HOA Dispute.jpeg

Homeowners who live in communities governed by a homeowners’ association (HOA) often run into a unique set of issues to deal with.  Whether it is rules and regulations that affect the usage and maintenance of property or difficult neighbors within the community, the potential areas for disputes to arise are plentiful.  While many times homeowners are able to amicably resolve issues, there are other times when that is not possible.  The question then becomes what is the best way to resolve disputes that arise with a homeowners’ association 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 homeowners’ association is at the association’s bylaws, rules and regulations.  It is common for these documents to provide an informal and/or internal process for community members to resolve disputes that arise between homeowners and the homeowners’ association.  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 allows an opportunity for an informal conversation to determine whether a dispute can be resolved internally and informally.  This is very often the most common sense and cost effective option.  However, it only works well when both sides are engaged in rational thought.  There have been a number of instances across the United States where either the association’s board or the homeowner have taken an unreasonable position on a particular issue and in those cases, the internal and/or informal processes simply do not work.  The internal process might also provide for a second level opportunity to attempt an internal resolution.  It is important both for the board of directors and the homeowner to be sure the internal process is followed so that if there is action at the next level, there are no procedural issues with how things progressed initially. 

The internal process that is provided for in a particular homeowners’ association may be driven in large part by the law of the State in which the association is located.  Some states have enacted legislation that provides specific guidelines for homeowners’ associations to follow for dispute resolution and those guidelines must be included in the homeowners’ association’s internal process.  In states that do not require an internal dispute resolution process, often homeowners associations have enacted their own such process by including it in the association’s bylaws and/or rules and regulations.  It is very important for homeowners to be familiar with what is provided for in their particular association’s documents so there is a clear understanding of the homeowner’s rights and responsibilities in achieving 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 for, the next step is often what is known as alternative dispute resolution or ADR.  Alternative Dispute Resolution can be in the form of mediation or arbitration.  Mediation involves a third party neutral who essentially 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.  Although whether a dispute gets resolved in mediation is voluntary, often state law or the association’s bylaws, rules and regulations require that mediation be attempted as a means to resolve a dispute before either party can initiate litigation. 

Another form of ADR is called arbitration.  Arbitration is different than mediation because a decision maker who is referred to as an arbitrator actually decides how the dispute is resolved.  There is normally a hearing process whereby each side presents evidence and then the dispute is submitted to the arbitrator to make a decision.  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 homeowners’ associations 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.  All of those are important considerations because at the end of the day, homeowners as members of an HOA are still neighbors to each other.  Disputes such as these can destroy the neighborhood relationship beyond repair which is another reason both HOAs and homeowners need to proceed carefully when disputes such as these arise.

Anti-Lawsuit Legislation

In the interest of keeping homeowner’s association disputes out of court, many states have enacted legislation which prohibits lawsuits from being filed in this area.  Often these statutes require that homeowners’ associations and/or Homeowners initiate an informal or other grievance or dispute resolution attempt before any lawsuits can be filed.  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 was recently enacted that requires a formal grievance procedure that must be followed.  In addition, 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 10 days.  In this particular case, the next step in the process under the new law is either mediation or binding arbitration which was discussed above. 

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.  This really makes sense from a variety of perspectives and represents a common sense approach to finding ways to resolve problems.  This can be especially true if the nature of the violation is minimal.

How To Find A Mediator or Arbitrator

If you are either an HOA or a member of an HOA and you need to find a mediator, what is the best place to look?  In many states, there are associations of mediators who run a collective mediation data base so that individuals looking for mediators can make contact this way.  Many mediators are attorneys also and so often there are lists of mediators available through various state bar associations or other professional associations.  In states that have a governmental department that actually 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. 

Another great way to find suitable mediators is through internet research or word of mouth.  In states that have a large number of HOA communities, it is often something that could be learned by contacting other HOAs in other communities to see if they have had to use a mediator and in this way, obtain recommendations concerning the same. You can also visit the American Arbitration Association and AAA Mediation.org for helpful information and resources.

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, and thus each side is able to go into the process with some idea on the arbitrator’s background in terms of decisions.

Where Can Homeowners Get Help?

When disputes arise with an HOA, where is the first place homeowners can look for help?  While the information contained above clearly looks to find ways to resolve disputes prior to going to court, one place a homeowner might consider going at least initially is to consult with an attorney who is familiar with state law and who can provide advice to the homeowner as to how to proceed first. This may be very important if there are procedural steps that need to be undertaken 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 who is responsible for HOA administration.  This will vary by state as 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 what types of information are necessary.

Depending on the nature of the dispute, it may be also wise for the homeowner to consult with fellow members of the HOA to determine whether there have been any similar disputes in the past and if so, how were they handled.  Regardless of the outcome of the process, it is always important for both the homeowners’ association and the homeowner to conduct themselves in a way that will not destroy the neighborhood relationship and the rapport among members of the community.