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How to Manage HOA (Home Owners Association) Disputes.

Introduction

Since 1964, Home Owners Associations (HOAs) have become ubiquitous in the United States.

  • 40 million households are part of HOAs

  • 62 million people live within HOAs

  • 53% of owner-occupied households are covered by HOAs

  • Despite stagnant growth of home buyers, HOA’s grew by .54% last year

  • California has the most HOA’=s with 49,200, followed by Florida, 48,500; followed by Texas, Illinois, North Carolina, and New York.

  • Florida is home to the largest HOA with 27,000 owners


What Types of Disputes?

HOA’s are hotbeds for disputes. Disputes include:

  • Between owners

  • Owners and renters

  • Owners and the Board of Directors

  • Owners and management companies

  • Owners and neighbors

  • Owners, management companies and service providers

  • Owners and the original development company

The number one dispute, of course, revolves around noise. The biggest noise dispute is stomping, walking loudly, etc. usually from an above floor, with many stating that they have “an elephant” who lives above them. The second biggest noise dispute emanates from parties and gatherings.


The number two type of disputes revolves around animals, specifically dogs. It may be the barking or not picking up after the dog, etc.


Here are some of the most common causes of HOA disputes between neighbors, according to HOA Management:

  • Noise complaints (loud parties or sound from TV, music, or instruments)

  • Excessive barking from pets

  • Unruly behavior from children

  • Visual nuisances (overhanging trees, overgrown lawns, overflowing trash cans)

  • Property maintenance issues

  • Strong or unpleasant odors (cooking, smoking, etc.)

  • Illegal or disruptive behaviors


How Many HOA Disputes in the United States?

There are no verifiable statistics. Some HOA experts estimate that there is one dispute per year per resident, so it might be said that there are 62 million disputes per year.


Why Are There So Many HOA Disputes?

Odd Governing Entity. It is estimated that there are over 89,000 governmental entities including town councils, county commissions, etc. Most of these folks are elected and get paid, sometimes minimally, but nonetheless, paid.


HOAs are different. One, they are comprised of uncompensated volunteers. Second, few want these positions. Third, many owners do not attend or vote when needed such as changing the governing documents. They get out of voting by using proxies. This sets the stage for minimal involvement.


Controlling/Directive Personalities Attracted to HOA Leadership Positions. In almost all cases, Board of Directors are volunteer=no pay. So, who is attracted to this volunteer situation? Some say that controlling, directing personality types are attracted to HOA leadership. This is the type of personality who wants rules and regulations to be enforced. Often they view situations as “black/white,” no grays, no nuances which means no exceptions. They are usually not team players. They usually are not enthusiastic about residential, owner, tenant involvement. They feel that they know what is best for all aka “they have the answers.”


Residents/Owners/Tenants Not Fully Engaged. In most HOAs most owners are not engaged. They barely vote and often vote via proxy. They do not feel invested in the governing of the HOA until they have a problem. They often do not know their neighbors. Disputes are more likely to occur between strangers than people who know each other at HOA’s.


Some of the most common causes of HOA disputes of this nature include but are not limited to:

  • Disagreement about violations the homeowner is accused of committing

  • Fines imposed on homeowners

  • Differing interpretations of rules and covenants

  • Imposing a rule not recorded within the governing documents

  • Disagreement about the HOA’s authority to enforce rules

  • Inconsistent or selective enforcement (or the perception of it)

  • Disagreement about fund management or budgetary issues

  • Imposing special assessments or an increase in dues”

Here are some examples:


Example: HOA Includes Dispute Resolution Clauses

At this particular HOA, no one wanted to run for the board. Their major reason is that they did not want to or did not like dealing with residential complaints. One of the owners decided to create a platform and a plank of five folks. The platform advocated for the inclusion of dispute resolution in all condo activities.


Rules and Regulations: A three-step dispute resolution clause was added.


- Step 1: If a resident has a dispute with another resident, they must make contact with that resident to try to resolve it via good faith communication and negotiation. Most, when reading this step would say, Is this not common sense? It may seem like common sense, but generally it is not accomplished.


“A cheat sheet” was also distributed on how to communicate and negotiate. One hint was that if the party noise was ongoing, do not confront the person at the time. Assume that the party includes drugs or alcohol. So, wait until noon the next morning to communicate.


- Step 2: If the good faith negotiation does not work, the Board will provide a trained mediator.


- Step 3: If mediation does not work, the board will provide a trained arbitrator who will make a binding decision. This avoids all court action.


The Result: Residential complaints dropped by 90%. It is hoped that was because residents followed the above steps. It might also have been the steps were too daunting and the residents “lumped it.”


Service providers including management: A three-step dispute resolution clause was included in all HOA contracts, also avoiding court action.


Involvement: There was a commitment by the board to include as many residents as possible in the board committees, etc. After due diligence, more than 70% of residents including tenants became involved with the committees. The board went on the assumption that each resident, whether it be owner or tenant, had a bit of time to devote to the living situation: the HOA. Through the gardening or lobby design or laundry, etc. committees, folks got to know each other making it easier to talk with neighbors about issues.


HOA Neighbors: If a dispute arose between the HOA and neighbors, the same dispute resolution approach was used including city agencies.


North Carolina Dispute Resolution for HOA Example.

New Mediation Program to Help Resolve HOA/Condo Disputes CAI North Carolina (CAI-NC) announces a public service program that provides a faster and less expensive alternative to litigation, the Community Association Mediation Program (“CAMP”). The Community Association Mediation Program assists disputing parties in resolving conflict through a neutral third party…The CAI-NC mediation program covers the entire state geographically. · At least one party must be a North Carolina community association (HOA or condo). · Attorneys for either party are permitted in the mediation process, but not expected or required. · In mediation, the mediator is not a decision-maker, but assists the parties in resolving their dispute. Mediators are experienced professionals in the field of community association management or law.”


Dispute Resolution Mandates.

Illinois, Florida, and California: “When HOA and condo disputes occur, some states require that there be formal policies in place to resolve them. States such as Illinois and California have guidelines for resolving disputes. Florida regulates the process for disputes as well. In fact, the laws in Florida have taken effect in many areas across the country.


For condos, the state mandates pre-suit arbitration. For HOAs, pre-suit mediation is required. This applies only to disputes where the unit owner intends to take action with a unit or the common elements... Associations should have a clear policy and process in place so tenants and homeowners know what to expect should a dispute ever arise…Even though Florida requires HOAs and condos to have a policy in place to resolve disputes, sometimes these cases require litigation.”


California:“California law has provisions for internal dispute resolution (IDR) and alternative dispute resolution (ADR)…Associations must either adopt an IDR procedure or use the default procedure in the law…IDR is meant to be an informal meet-and-confer process for resolving disputes. If an owner requests IDR, the association must participate. But the association doesn't have to propose it."


New Jersey:“Many community associations’ governing documents include an ADR policy and may even provide for an ADR committee. Regardless of what the governing documents do (or do not) say, however, community associations in New Jersey are required to provide a procedure for the resolution of housing-related disputes. Although most ADR matters are between owners and the association, ADR is also applicable to disputes between unit owners.


Both the New Jersey Condominium Act (Condo Act), N.J.S.A. 46:8B-1 et seq., and the Planned Real Estate Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-21 et seq., require associations to provide a “fair and efficient” alternative to litigation for unit owners to resolve “housing-related” disputes between one another or with the association.”


Conclusion

HOAs should be designed and governed to prevent disputes. One important way is to engage all residents in the governing process through committees, working groups, etc. It is wise to have the assumption that each resident is willing to devote a bit of time to the HOA where they live. Remember there will always be this minority, maybe 20%, who prefer no engagement. Maybe they believe they are too busy or maybe they believe it is not their responsibility.


HOAs should realize that there will always be lots of disputes or differences of opinion at the HOA. This difference needs to be managed at the earliest possible chance aka “Nip it in the bud!” Research shows that the earlier a dispute is caught, the easier it is to resolve.


Second, regardless of whether the government mandates it, HOAs should include a dispute resolution process. Experience also shows that just by including such a process, disputes are prevented. People can no longer say "see you in court." They could say, see you in mediation/arbitration, but that has a different ring. A DR clause motivates people to negotiate in good faith and, if not, the next step is mediation and then binding arbitration.


HOA management companies need to take the leadership role with DR and simply consider if an integral part of their provided services.


Periodically, the Board should schedule “meet and greets” or “welcome meetings” where someone is assigned to welcome new homeowners to the community; give them the HOA Handbook, point out key requirements, and offer to answer any future questions they may have. Most folks moving into HOA communities don’t read the governing documents, and have no idea what they can or cannot do until they violate a rule.


Resources

Community Associations Institute (CAI)


North Carolina Dispute Resolution Process for HOA’s.


Conflict Resolution: How ADR Helps Community Associations ISBN: 0-944715-86-9, 2004, 48 pages, Author(s): Mary Avgerinos, CAI


HOA Leader

https://www.hoaleader.com/members/login.cfm?hpage=196.cfm




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