Mediation/Arbitration/Appeals Process

Started by GeorgerwilliamsW • 11 replies • 1987 views

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GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Let's take Robert's idea and start a new thread.

What do you think about a covenant mandated internal process regarding rules, fines and any other homeowner/association action in dispute.

There are at least two possibilities.

I envision a standing appeals committee elected by the homeowners, independent of the board, to hear and rule on any issues brought before it. Rulings would be binding on the association, but not on the homeowner (to maintain a balance of power).

Optionally, I envision a mediation/arbitration process in which a dispute can be brought to an board-independent committee of owners. Two members of the mediation committee would be appointed by the board (non board members) and two would be appointed by the homeowner. The committee would hear the issue and render a judgment. It would be binding on the board but could be taken to court by the homeowner if desired (in order to maintain a balance of power).

Neither of these would use the services of a professional mediator/arbitrator. I don't know if that is an advantage or not.

Could such a process be established without amending the covenants? Is it viable, especially when it is so incredibly difficult to get people to serve on the board and committee? Would neighbors shy away from a willingness to participate in order to avoid controversy? Would it create more controversy than it would ameliorate? Would it work?

What variants do you see.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Many groups have such "hearing" committees, appointed by the President. Roberts Rules of Order outlines such hearing protocol.

Just what the committee's power is would be the issue. Some have it set up that its decsion is final, with appeal to the Board, only. Otheres say that the Membership vote is the only appeal hearing that can take place after this committee makes its decision.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

All,
Lets say, we try and construct a Poliocy in a condo on how to insert this into the documents as a Policy decision by the Board, that would not need amendments to the docujments. Could this be done under an in house administration function, subject to changes by the Board with vote of the members. Maybe not a vote, more of a proclamation that here is is folks, you have thirty days to respond.

I like putting the option to the members, might generate some interest. Preceeding all ends with ???????

DonN (Michigan)
Posts: 357

Posted:

Regardless of what it is called, the "appeals" panel would be a judicial function. In our principles of government (public bodies), we have separation of powers. Such an arrangement could be made optional in owners associations with both the association and the owner required to agree to the terms and conditions before the "appeals" panel could function. A legally-binding document would likely be required. That may be difficult.

The knowledge expected of the "appeals" panel may be beyond what can be expected from volunteers. Interpretation of restrictive covenants and contracts (restrictive covenants are very specific contracts; bylaws are a contract between the association and the owner) have very specific rules for interpretation.

The quickness to move away from the language in the governing documents and the specific rules for interpretation is often illustrated in the posts on HOA Talk. Some commenters typically give the advice to read the governing documents. Others express opinions with no knowledge of what the governing documents say. Reading and understand the governing documents and the rules for interpretation and application are not easy tasks.

The election by the members of an independent "appeals" panel might be a step forward. The board typically writes some of the rules, enforces the governing documents and the rules, decides whether or not a violation has occur, determines the penalty, and then carries out the penalty. The classic judge, jury and executioner!!!!

Concentration of power in the hands of a few inevitably leads to abuses. There is a steady stream of such reported on HOA Talk. James Madison outlined both the problems and the principles in the US Constitution in the Federalist Papers. Always a refreshing read.

Don Nordeen
Governance of Property Owners Associations

KirkW1 (Texas)
Posts: 1,665

Posted:

George,

While I admire that you wish to remove the financial advantage in litigation that the BODs enjoy, I don't think the solution to the problem is to allow a one sided approach to mediation. (The owner can take it to court but the BOD can not.) Quite honestly, I don't know that I would ever trust such a process and would always opt for court.

The truth is that most BODs do try and be reasonable. And there are just as many owners abuse the process as well. Look at the the AHRC for an example. The owner has now been fined more then once for their abusive appeals.

My neighborhood has an abusive owner now. He has threatened to cost the HOA thousands in legal fees if we don't approve the deck and cover he built without permission. He feels that since it is up it needs to be approved as is. But if that is valid, then why ever ask first? And now he says he will "settle" if we agree that he can simply put up a fence he tore down as well. Never mind that you can clearly see the roof structure (which doesn't conform to the house at all) from the street even if the fence is in place.

And unfortunately there our president is now scared of any court case because of an unrelated case in another neighborhood by the same builder (with similar documents).

SusanW1 (Michigan)
Posts: 5,202

Posted:

I thought that George was talking about an internal hearing for violations.
Those kinds of steps are found in Roberts Rules of Order in the infamous Chapter XX - Disciplinary Procedures.

The "result" of the hearing can be that the association file a lawsuit. There is an explanation of the appeal process, too.

Once it gets into the courts, the association really has no role.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

A very insightful, accurate observation, Don:

"Concentration of power in the hands of a few inevitably leads to abuses. There is a steady stream of such reported on HOA Talk."

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Kirk, there is no one sided approach to mediation in what I proposed. The issue comes down to taking the matter to court after mediation/arbitration.

It is not uncommon in contracts to limit the ability of one side in a contract dispute to litigate an arbitration decision. Indeed, it is an important way to balance powers of the respective sides. Many insurance policies have language that require arbitration, but restrict litigation by the insurance company should the decision not be in its favor.

It is a good way to balance powers between non-equal contract parties. Homeowners associations tend to have greater financial resources and powers than individual homeowners. In the case you use as an example, the homeowner also will have large legal bills. In addition, in that case, the association can seek legal fees and expenses as well as court costs if it prevails.

You have not yet convinced me. Nevertheless, I can be convinced to change my mind on this.

BonnieE (Illinois)
Posts: 338

Posted:

Hi Susan,

Could you please provide a reference for where you said:

“I thought that George was talking about an internal hearing for violations.
Those kinds of steps are found in Roberts Rules of Order in the infamous Chapter XX - Disciplinary Procedures.

The "result" of the hearing can be that the association file a lawsuit. There is an explanation of the appeal process, too.”

I have looked at 3 Robert’s Rules websites. I could not find XX - they only go up to XIII.

I did find something I find of concern: Art. XIII. Legal Rights of Assemblies and Trial of Their Members. Taken from:

75. Trial of Members of Societies

“In acting upon the case, it must be borne in mind that there is a vast distinction between the evidence necessary to convict in a civil court and that required to convict in an ordinary society or ecclesiastical body. A notorious pickpocket could not even be arrested, much less convicted by a civil court, simply on the ground of being commonly known as a pickpocket; while such evidence would convict and expel him from any ordinary society.”

Any thoughts on this?

Thank you!
Bonnie

SusanW1 (Michigan)
Posts: 5,202

Posted:

Bonnie - I am looking at the 10th edition of the RONR.

***********************************

There is a vast difference between an internal "hearing" of the HOA on whether or not a violation occurred and if and when it goes to a legal setting. Ideally, there should be some steps that the homeowner can go thru before he seeks legal help.

The single homeowner is not on equal par with the CCRs or bylaws or even the Rules. They must be followed. It's a contract. You cannot paint your house pink. That's it. If you want a hearing on the validity of that or want an exception you should be able to approach the board or its committee. If you are being accused of painting your house pink and you think it's not, then you also should have the right to a hearing on it. The "consequences" are to recifiy the violation - whether yourself or the HOA will correct it , or you will be allowed to leave it pink.

The question of the composition of the "hearing" committee is interesting. Perhaps a mix of residents and professionals from the community would be the most fair.

Then there's the whole "appeal" issue.

If either party chooses, it can take it further and go into the legal system for another ruling, but I think our court system will balk at having to hear a bunch of corporation's internal squabbles with its members.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

To all,
Stimulating discusions going on here, keep it up.

Regards the Observation above. This is a fact but it also requires some statement about how this concentration of power occurs in many associations. Apathy of the absentee and sometimes full time owners results in folks having to do the job by default. Rarely , I think, does this kind of process result in a dictatorial Board. Not an absolute but it seems from the postings that a lot of those writing are sort of managing by default. Even with a five man board and onlt two members full time , the situation can quickly turn into 2 people making all the decisions, or at least accomplishing all the decisions. This is a far better situation than a manager or a management company becoming dictatorial. Exceptions of course.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

I should have noted the above refers to Post# 394 by George.

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