No Need to Ignore the Elephant in the Room!

The following scenario will paint a picture for you and how you, if necessary, would commence paving the path to the mediation conference. The following is based on real life issues:

The Board of an HOA called inquiring if mediation is an option regarding an issue they are having with their developer. As this community approaches turnover from the developer, there’s a bit of a squabble over finances. The developer holds those monies the association needs for repairs and maintenance which, according to the Board, the developer has neglected to maintain.

It would be best practice for this HOA to hire an attorney to oversee this turnover. But as in many cases HOA’s want to hold on to their reserves and save every precious penny for future repairs, grounds keeping, painting, repaving roads or for that day when the repair is overwhelming or catastrophic, such as unexpected storm damage. The parties have been negotiating and are now close to a settlement agreement. The difference in the dollar amount is fairly high and the negotiations are stalling.

The Board would like to initiate a mediation conference between the HOA and the developer and put an end to the quibble. There is a lot of work and repair that needs to be made to the common elements and the HOA wants to recover the money as dictated by the turnover audit.

So the HOA has taken the initiative to call a Mediator, surpassing the cost of having an Attorney write a demand letter and guiding them through settlement

This is not the traditional route to mediation… but it works!

Another quick example of pursuing mediation with or without representation comes from a variety of programs offered through your State. The State of Utah for example has Utah’s Dispute Resolution Center¹ available to its citizens. The Utah Dispute Resolution Center is a non-profit and has an impressive Community Association Program offering a sliding scale fee and qualified pro bono Mediators. Additionally, the Center offers mediation services to low income homeowners in disputes that do not require a monetary settlement. Great resources such as this program are offered in most states nationwide.

A mediator is a neutral, third party facilitator assisting in negotiating a settlement between two or more disputing parties. It is paramount for the mediator to maintain impartiality. Referring back to the example given above, although the inquiry was made directly from the HOA to the Mediator, full disclosure to the other side, the developer in this case, as to how the case came to the Mediator must be made. The Mediator should make the determination to recuse oneself if any fine lines of impartiality appear to have been crossed.

The option to mediate may also be dictated by contractual agreement, this clause may exist in the developers community documents.

Contrary to court ordered mediation, as discussed above, the HOA and the developer are already in dispute and the HOA will be requesting voluntary mediation. This route and goal is to resolve and settle the dispute and avoid the expenses and time incurred by not going to court. Should the parties move forward and agree on mediation, the Board will write a letter to the developer and request mediation, they may include the names of one or more mediators and share with the developer accompanying mediation fees. Once both sides agree to mediate the selected Mediator will submit to both sides an Agreement to Mediate and request a summary of their respective issues and position, although not every Mediator follows this path. The mediation is then scheduled at a location agreed upon by the parties as well as the Mediator, such as the office of the Mediator; the developers’ or their Attorneys’ office; or the HOA Clubhouse if it can accommodate a mediation.

1. Ask your attorney if mediation is called for, regarding the matter in dispute.
2. If the HOA does not want to retain counsel, research mediators in your area and those who specialize in the area of your particular dispute — community association disputes.
3. If proceeding on your own, discern if mediation is an option for your community.
4. Check statutory requirements regarding mediation in your State, different States have different rules. You will find this information on your state’s website, search for statutes or the state court system and enter ‘mediation’ and ‘homeowners association’ among other words you feel will assist you in your search.
5. Always refer to your communities governing documents to confirm you are proceeding in a manner dictated by the documents.