With dozens—and sometimes hundreds—of people living in a community governed by neighbors, acquaintances, and friends, disputes can transpire frequently, as is the case with condos and co-ops. Undoubtedly, disagreements among residents, boards, and vendors can run high and when they do, the specter of litigation can loom large over the affected parties, creating worries about costs—both financial and in terms of time—as well harboring bad feelings and an uncomfortable environment for the community as a whole. There are plenty of reasons to find other ways to settle disputes.
Fortunately, alternative dispute resolution offers two options for settling and moving on from divisive issues. Those options, mediation and arbitration, are both effective and can help shareholders, unit owners and boards resolve thorny issues without either party ever setting foot before a judge.
Points of Contention
For the most part, harmony rules over co-ops and condos more so than conflict, says attorney Ramon C. Palacio, Esq., partner with Association Law Group, P.L., which has offices in Fort Lauderdale and Miami. “Fortunately, in most condominium associations, the conflicts between board members and residents are minimal, as residents who choose to live in a condominium understand that with the advantages of not having to worry about maintaining the exterior of their home, roofing, painting, or even landscaping, for example, come certain restrictions. Those restrictions may be as common sense as keeping the noise level down and may also include the requirement to obtain approval from the association before renting the unit.”
But when things do go wrong, and they invariably do, there are some types of issues that spark more problems than others. “Disputes arise with shareholders versus shareholders and shareholders versus owners,” says Jeffrey T. Zaino, Esq., vice president of the American Arbitration Association in New York. “The most common (conflicts) are shareholder versus owners for problems in their condo.”
Some types of communities may be more prone to conflicts than others as well. “Interestingly, the smaller the association, the greater or more personalized the conflict because the residents and board are often constantly running into each other,” says Palacio. “When a resident fails to pay the unit’s assessments in a timely manner, for example, the board can take that quite personally as the rest of the unit owners in the small association are having to pick up the shortfall through higher regular assessments or perhaps even a special assessment.”
Other issues can also spark contentious relationships between boards and residents. “Sometimes the conflicts relate to whether the board is ‘over-maintaining’ the building, meaning spending too much money on, for example, patching and painting on an ongoing basis, and sometimes it’s the exact opposite, with a resident perhaps complaining that not enough upkeep is taking place,” says Palacio.
Pets can be another significant source of conflict, says attorney Jay Steven Levine, the founder and shareholder of Levine Law Group, which has offices in Boca Raton, Palm Beach Gardens and Melbourne. “Someone may have a pet and the pet is too large or there is more than the number allowed or it’s a type of pet not allowed in the documents,” he says. “Or it could be the behavior of the pet.” As innocuous as it may sound to an outsider, for residents living side-by-side with one another, the failure of a board to take care of pet problems can escalate with everyone involved potentially taking the matter at hand very personally, especially today when more and more people see pets as part of the family.
Other sources of conflict include the ability for owners to lease their units or to make repairs or architectural changes to the exterior of their homes. These can become points of serious contention as interpretation of governing documents may clash, muddling the ability to find a resolution or common ground.
Arbitration vs. Mediation
When a problem does arise and solutions appear scarce at best, the first thought often falls to litigation with one or both sides threatening to take the other to court—a very expensive first step. Fortunately, mediation and arbitration offer effective alternatives. Although both mediation and arbitration both fall under the category of alternative dispute resolution, they are very different.
“Mediation,” notes Zaino, “is less formal than arbitration and is non-binding. Also, ex parte communication is permitted with mediation.” Ex parte communication means someone who is a party to the case or someone involved with a party that can communicate with the mediator.
Another difference is that “arbitration are binding and decisions of arbitrators are difficult to vacate,” says Zaino. “There is a very high legal standard for vacatur,” which is an order of the court vacating a legal proceeding.
For residents of a homeowners association, mediation is most often the first step before any move toward litigation is permissible, says Levine. “For condos, mediation is not required for court, but under the condo statute, you have to go to arbitration, which is binding but not final in the sense that you can appeal to court. They have 30 days to file a lawsuit disagreeing with the arbitrator’s decision and then it’s like a brand new case. If they don’t appeal, it’s an enforceable order, and if they don’t comply, then they go to court to enforce it. Arbitrators can’t enforce their orders, only a court can.”
Mediation is more based on negotiation than on the win-lose model of arbitration. “The mediator simply acts as a neutral facilitator to allow the parties to talk face-to-face and to the mediator privately as well during a caucus,” says Palacio. “And quite often this can be very effective. If court-ordered, the parties are required simply to show-up in good faith. The mediator cannot impose a decision and the parties are not required to reach an agreement. An impasse may be declared if the parties aren’t amenable to changing their position. Conversely, if an agreement is reached, the mediator reduces it to writing and there is now a written agreement between the parties to dispose of the dispute.”
For condominiums, alternative dispute resolution is addressed in Florida statute 718.1255, which encourages voluntary mediation, says Palacio. “The Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business & Professional Regulation responds to and oversees petitions for arbitration,” he says. “Not all disputes are subject to arbitration, for example, such as the non-payment of assessments or the proper ownership of a unit.”
The Pieces Come Together
The process of mediation may seem mysterious—it is not usually the subject of network television shows, lacking the tension of high profile court cases. It is, though, a highly-effective and efficient method for getting to the bottom of a disagreement, especially in the hands of highly skilled mediators.
When mediation is decided upon, the mediator will be approached by the attorneys involved in the situation. Then the mediator will speak to both sides by telephone—either the attorneys or the parties directly and logistics for the mediation session are established.
At the meeting itself, there will be a joint session with everyone in the room, unless there are reasons for the parties to be separated, such as instances that involve high emotion. Then the parties will meet with the mediator individually before returning to a joint session. There are a number of variations to this format, which is something that a good mediator will use to his or her advantage to create the best possible environment for finding a solution to the problem at hand.
Arbitration is different in that “arbitration is a creature of contract or submission,” says Zaino. “The normal process involves the parties receiving a list of approximately 10 names and biographical information on the arbitrators. The parties strike and rank the list, leaving as many names as possible. The lists are not exchanged but submitted directly to the neutral provider that sees if the parties mutually agreed on someone.”
Once the arbitrator is decided upon and appointed, that individual signs an oath and makes disclosures on any conflicts of interest, just as a mediator does. If there are no conflicts of interest, a hearing is then scheduled.
While much more court-like than mediation, arbitration remains less formal than litigation. “The rules of evidence need not apply,” says Zaino. “There can be no ex-parte communication. When the evidentiary hearings conclude, the arbitrator will draft an award and issue it within 14 or 30 days. The award can be reasoned if the parties request that.”
Sometimes, no matter how good the mediator or arbitrator, a situation cannot be remedied through alternative dispute resolution. Certain disputes become highly personal and the parties can become in-transient, says Palacio. “ADR can precede litigation—and in some cases must—or it can take place voluntarily or by order of the court if already in litigation,” he says. “If ADR fails as a pre-litigation measure, the next step would typically be the filing of a lawsuit.”
Effective or Ineffective?
Mediation tends to be a positive and effective avenue for resolving issues as does arbitration, with lower costs for everyone involved. “Litigation should seldom if ever be the first recourse,” says Palacio. “Bringing in an impartial mediator can often resolve the situation before the matter escalates and people have expended a great deal of time, money and aggravation.”
Ultimately, if all parties involved can agree to commit to alternative dispute resolution, “it is very effective with respect to both time and cost,” says Zaino. “If parties sit down for a mediation session, there is an 85 percent chance that the case will settle.” And everyone will have saved time and money.
Mediation and arbitration can get to the heart of the matter quickly, efficiently and effectively, helping resolve disagreements in ways that can satisfy all parties involved and rectify situations that could escalate without warning. With the help of unbiased third parties, a willingness to talk and work toward a solution can benefit all involved.
Elizabeth Lent is a freelance writer and a frequent contributor to The South Florida Cooperator.
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