HOA Internal Procedures for Dispute Resolution

There are several ways in which an association may efficiently enforce its governing documents without resorting to the expense and delay of prolonged court proceedings. Depending on the particular violation and on the provisions of the association’s governing documents, many violations can be managed effectively by using internal enforcement procedures (such as fines or suspension of rights) rather than litigation.

An association’s internal dispute resolution procedures are commonly referred to as a “meet and confer” session with a member, or the use of a more formal “alternative dispute resolution” process like arbitration or mediation. Establishing a record that demonstrates that the community association made reasonable efforts to obtain voluntary compliance before initiating litigation is likely to result in a more cordial judicial reception for the dispute and the association’s request for its costs and attorney fees. The two most important issues when dealing an association’s internal enforcement proceedings are: (1) confirmation of the validity of the particular covenant or rules that are the subject of the enforcement proceeding; and (2) the validity of the enforcement procedures that are utilized by the association.

An association’s governing documents should include provisions that authorize the imposition of monetary penalties, temporary suspensions of an owner’s membership rights, or other appropriate disciplines for a member’s failure to comply with the governing documents, as well as provisions for procedural due process in the imposition of member discipline. In addition, a homeowners association’s internal enforcement procedures should be clear and concise so that members can understand the process, and should provide for the following items:

1. A complaint. The party alleging that a violation of the governing documents has occurred should be required to complete a written complaint that describes the substance of the alleged violation.

2. An investigation. Following its receipt of a complaint, the board or management should investigate the facts to determine the likelihood of the violation and should notify the owner of the alleged violation.

3.  Notice to the member of an alleged violation and a hearing. If the board determines that there may have been a violation and elects to meet to “consider or impose discipline” on a member, it must provide advance written notice and offer a hearing to the member (in compliance with applicable state laws and the association’s governing documents) with at least the following information:

• The date, time, and place of the meeting;
• The nature of the alleged violation for which a member may be disciplined; and
• A statement that the member may attend and address the board at the meeting.

4.  A hearing conducted with some degree of due process before imposition of discipline. The degree of procedural due process that is required to be accorded to an owner potentially subject to a fine or other discipline should be in accordance with the association’s governing documents and state law.

5.  Notice to the member of the ruling after hearing. If the association imposes discipline on a member, the board must give the member appropriate written notice of the decision in accordance with the association’s governing documents and any applicable state laws.

6.  A possible appeal of an adverse ruling. If the decision to impose a fine or other discipline on a member had been made by a committee whose members are not directors or who represent a subset of the entire board, the association’s enforcement procedures should provide that an aggrieved party may appeal a decision of the enforcement committee to the association’s full board of directors. The board may be authorized, on appeal, to either review the committee’s decision or conduct a new hearing.

When a homeowners’ association seeks to enforce the provisions of its governing documents in order to compel a member to comply with the association’s governing documents, it is incumbent upon it to show that: (1) it has followed its own standards and procedures prior to pursuing such a remedy; (2) that those procedures were fair and reasonable; (3) and that its substantive decision was made in good faith, is reasonable and is not arbitrary or capricious.

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