Monday, December 2, 2013

HOA Dispute Resolution Study: opportunity lost or recognized

Got an HOA problem, read on.  Colorado's State HOA Office through HB-1134 was directed to perform a study to recommend an optimal HOA dispute resolution process for homeowners.  Due date, December 31, 2013.  The result of this study will either make Colorado's many extensive and definitive HOA laws effective or endorse a continuation of the empty HOA law enforcement environment that has been in place for the past two decades.  Depending on the outcome of this study, home buyers may continue to have a legitimate reason for not moving into an HOA: their HOA by-laws and State laws will continue to provide little protection from abusive practices of HOA Boards from a homeowner’s perspective.
Colorado HOA laws provide homeowners with our courts as the primary means of dispute resolution: costly, litigious, time consuming, and out of reach for most homeowners.  State HOA law also advocates the processes of mediation and arbitration.  Mediation, unfortunately, is a process that asks homeowners to gamble hundreds of dollars on a process that doesn't guarantee a binding outcome.  Additionally, any mediated agreement can subsequently be ignored by either party without prejudice sending the homeowner back into the unworkable court system for a decision.  Who is kidding whom by advocating mediation as a workable process?
Colorado law (CCIOA) includes a process for settling disputes, providing decisions, and avoiding court.  It's called arbitration.  It has been avoided like the plague for over 20 years.  Arbitration for HOA disputes would simply empower mediators to render enforceable decisions for most cases.  This is called med-arb: a recognized legal process and profession.  It can be implemented at no cost to taxpayers, requires no additional staffing in the State's HOA Office, and can financed through a combination of funding through HOA registration fees and litigant filing fees.  The accessibility, affordability, and fairness of such a system would immediately make HOA laws enforceable from the homeowner’s perspective.  All homeowners would have a venue to file complaints and gain decisions to pursue their rights.  No advantage to the HOA that has unlimited resources and lawyers to fight the ordinary HOA resident.  This type of system would also relieve our court system of cases that don't belong in court and can and should be resolved in a more informal setting.  Litigating such cases out of court will save the homeowner and HOA in legal costs and reduce court operational costs.  Med-arb would not require a homeowner to give up their right to a court case.  The homeowner can opt to go to court or use the State med-arb process.  Decisions would be legally binding.  Note, med-arbs (mediators empowered to render decisions) would be trained in HOA law, mediation, and receive the required training in arbitration.  Those making decisions on HOA complaints would do so based on HOA law and their training in this subject matter vs a court judge who most likely is totally unfamiliar with these matters.  Med-arb brings finality to HOA homeowner complaints as opposed to mediation that is built on a platform of maybe’s, if’s, and hope; a process that guarantees no decision is reached; adds costs and time to home owner dispute resolution; and over its’ twenty years as a recommended solution for resolving complaints has failed homeowners.
Note this fact about mediation in Colorado and another reason it doesn’t serve homeowners well.  Mediators, well, anyone can be a mediator.  Mediators are not licensed or regulated.  Kickboxers, hair stylists, tow trucks, and investment advisors are regulated but a mediator for resolving HOA complaints has no minimum qualifications, rules, or regulations under which to operate.  Mediators are not required to be certified in the topic they mediate.  You could get a divorce or labor mediator for your HOA complaint: what is wrong with that picture.  So, using mediators to gain a competent, informed, based on HOA law, satisfying decision may be something promoted by that trade group but simply can’t be supported by the professionalism of the industry.  We advocate med- arbs that are required to be educated in mediation skills, arbitration skills to the level needed in these simple HOA cases, and in HOA law.
Then there is the strong argument that if one is to mediate a dispute why not simply set the mandatory goal, as in med-arb, to reach a decision based on economic factors.  Specifically, it will cost several hundred dollars to mediate with no guarantee of a decision.  Most will avoid and can’t afford to gamble on mediation for a result.  Does it really cost anymore or only a few dollars more to empower the mediator (med-arb) to finish off the deal and render a decision when mediation doesn’t result in an agreement.  NO! 
One state, Virginia, has a system for resolving most HOA complaints out of court.  Other states, such as Nevada offer dispute resolution under the titling of "referee program" that is a nothing more than mediation disguised by a fancy title (uncreative at best).  Some states have moved towards mandating mediation prior to presenting a case in court: this only mandates the pitfalls of mediation.  Other than the Virginia type process, the other states seem to set the bar for dispute resolution through mediation at resolving at best 50-60% of the complaints leaving a good number of homeowners out in the cold.  Also, with any mediation system there are many more not filing claims due to the weaknesses of that process and the requirement for a homeowner to gamble hundreds of dollars and their time on a hope of a decision. 
Colorado recently passed HB 1277 that will license and regulate HOA property management companies.  As a result, the State (DORA) will review, process homeowner and HOA complaints, and render decisions and penalties for violations.  All out of court and low cost!  This is in effect a med-arb environment that is good enough to settle most complaints against property managers but such a process has to date not been offered for homeowner HOA complaints with their HOA?
The legislature has recognized the need for change in HOA law enforcement through HB 1134.  I doubt the expectation of the study mandated under this Bill is to continue with our failed system of courts and mediation.  I also doubt that legislators want the current processes simply re-labeled and dressed-up and offered as a creative solution.
Colorado HOA homeowners await the results of the State HOA Office's study.  The opportunity for Colorado to lead in HOA governance has arrived.  The Colorado HOA Forum has been a leader in promoting a process of out of court binding dispute resolution to make our good laws effective and provide both the HOA and homeowner with a venue to resolve conflict that is fair and workable.  We hope the State’s study will result in opportunity recognized and not lost?

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