Monday, April 14, 2014

State HOA Office Study Recommendation Avoids Costly and “milk toast” HOA Dispute Resolution

The Colorado State HOA Office completed its’ study on HOA dispute resolution.  One of the recommendations deserves actions:  Implementing a binding arbitration program would be a cost-effective and expeditious means by which many of the disputes between homeowners and HOAs can be resolved”.  This would be the single most important and effective piece of HOA legislation passed in decades.  Cost savings to HOA’s and home owners will be millions of dollars a year in legal costs. The proposal can level the legal playing field that currently pits the limited funds of a home owner against the unlimited funds and legal resources of the HOA.  The program would resolve problems based on HOA law and HOA governing documents vs. legal proceedings and manipulation.  Complaints would be resolved in a timely manner before compounding.  HOA complaints would begin and end out of court through an initial inexpensive filing fee and end with a binding decision rendered by a trained HOA arbiter.  Home owners could still choose to go to court vs using this process thus no legal rights are forfeited.  The process is not complicated, doesn’t require lawyers, will not cost taxpayers, and is easy to implement.
HOA complaints mostly don’t belong in a court room and such proceedings cost taxpayers in court costs and unduly overload our court system with cases. HOA complaints mostly concern non-compliance with State law and HOA governing documents and certainly don’t require lawyers and complicated and costly legal proceedings in a court. 
This solution is NOT the flawed mediation process that requires home owners to gamble hundreds of dollars on a mediation session in the “hope” of gaining an agreement on dispute resolution.  Mediation has been a recommended dispute resolution for decades in HOA legislation and is minimally effective.  Mediation adds time, process, and cost for home owners on dispute resolution with no guarantee of finality.  The agreements in mediation can be “walked away from” by either party without prejudice thus sending the parties back to court:  the very thing trying to be avoided.  Mediators are not licensed and don’t require any HOA educational or training standards. Mediators hearing your case can thus be anyone.  This “profession” has less standards and rules than beauticians, plumbers, manicurist, etc. Mediators claim to resolve up to 50-60% of cases heard but what about the other 40% who are thrown back into court and the uncounted complaints that are never filed due to an inability of a home owner to gamble hundreds of dollars on the uncertainty of mediation? 
The recommendation of the State study can resolve the flaws of dispute resolution through the courts and mediation.  The out of court process involves using trained med-arbs (mediators with arbiter decision making authority) in an out of court venue. The cost to taxpayers is zero as the system would be self-funded.  The State’s HOA Office would oversee this process.  It already has an infrastructure in-place for filing complaints and collecting fees.  The process is similar to handling home owner complaints with HOA property managers through the Department of Regulatory Agencies (DORA).  Thus, DORA has administrative models, precedence, and experience to implement this system. 
Objections are surely to come from lawyers, the Community Association Institute (CAI), and mediators who have spoken against this process based on their economic stake in continuing the current litigious and costly dispute resolution process.  However, with thousands of complaints and inquiries received by the State’s HOA Office and legislators it is time to focus on solutions and problem solving vs continuing on the current path that has tainted HOA governance and made HOA laws ineffective for home owners.
Out of court binding dispute resolution is affordable, simple, fair to both HOA and home owner, provides cost savings to home owners, HOA’s, and taxpayers, provides timely complaint resolution, is accessible, doesn’t require anyone to give up their legal rights, and results in decision and finality in disputes.  The State’s recommendation awaits legislative sponsors.
Colorado HOA Forum

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