Does Your HOA Have Adequate Policies and Procedures for the Internal Resolution of Disputes?

by | May 5, 2015 | Dispute Resolution

Part of living in a common interest development involves issues relative to disagreements between the homeowners association and members over compliance with the association’s governing documents (i.e. declaration, CC&Rs, rules, or policies). History has shown that disputes between homeowners associations and their members frequently become very emotional and adversarial. As a result, a matter that started out as a relatively small issue could easily develop into protracted litigation that becomes very costly and destructive to both sides.

Recognizing the importance of homeowners associations trying to resolve disputes with their members informally, it is essential for every homeowners association to have an effective internal dispute resolution plan. State laws and/or an association’s governing documents should provide guidelines for the handling of internal disputes between a homeowners association and its members. For example, in California, a homeowners association is required to provide its members with a “fair, reasonable, and expeditious procedure for resolving a dispute between the association and a member involving rights, duties, or liabilities” (California Civil Code §5905). The California statutes also provide that, in the absence of the homeowners association having established mechanisms for resolving such disputes, there are mandated default provisions that will apply, such as:

  • There must be a request for a “Meet and Confer” conference or “Internal Dispute Resolution” set forth in writing;
  • The request may be initiated by either the association or the member;
  • A member may decline an association’s request, but the association may not decline a member’s request;
  • The association must have a designated board member attend the meet and confer conference with the member;
  • The parties must meet at a mutually convenient time/place and make a “good faith” effort to amicably resolve their dispute;
  • Any agreement that is reached to resolve the dispute must be put into a writing;
  • The agreement that is reached may be enforced in court so long as the agreement is: (i) not in conflict with the association’s governing documents, or the laws of the state having jurisdiction; (ii) within the authority of the board representative or is ratified by the board.

(California Civil Code §5915).

Every homeowners association should strive to resolve disputes with its members through established dispute resolution mechanisms that have been adopted by the association. Those mechanisms should include provisions that are similar to those that are contained in default provisions of the California statutes as well as additional pertinent provisions that are not included in the California statute such as:

  • Whether or not legal counsel is permitted to attend the conference;
  • The circumstances under which a member should be permitted to have assistance from a person other than legal counsel due to language barriers, age or physical impairment;
  • Whether or not all members of a household where there are multiple members must participate in the meet and confer conference;
  • Whether or not the association should have more than one board member participate in the meet and confer conference;
  • The confidentiality of the meet and confer conference;
  • Whether or not the proceedings may (or should) be recorded to maintain an accurate record of what transpired;
  • Whether or not the parties are required to submit their dispute to a more formal alternative dispute resolution process, such as mediation and/or arbitration, if the issues are not resolved through the meet and confer conference;
  • Whether or not the parties to an alternative dispute resolution process that is chosen could agree that a decision would be binding.

In considering whether or not to permit the parties to have legal counsel participate, it is suggested that absent a state law provision that mandates the right to have legal counsel participate in an informal dispute resolution process, the parties not be permitted to be represented by legal counsel. Given the informal nature of the process and the intended purpose of being able to resolve disputes in a less adversarial and less costly manner, the introduction of attorneys into the process can be counter-productive as it frequently causes the other side to also bring in counsel and thereby creates additional expense for both sides and a more adversarial proceeding.

Because disputes with homeowners are a real component of the operations of a homeowners association, they should be anticipated and considerable thought should be put into the development and implementation of an effective internal dispute resolution process. The policies and procedures should be developed with the assistance of legal counsel and an association’s board of directors and management personnel should be well versed in those policies and procedures. Most importantly, associations should strive to resolve disputes with homeowners concerning issues about violations of the association’s governing documents through this informal process in an effort to avoid the likely ramifications of becoming embroiled in costly protracted litigation.