Thursday, October 9, 2014

Why HOA State Law and Governing Documents are (not) enforceable

There are plenty of definitive and comprehensive State HOA laws.  HOAs have their own governing documents defining controls, covenants, and restrictions.  HOA Boards ensure compliance of covenants through their authority by issuing fines, court actions,  and/or foreclosing on property for unpaid fees, fines and special assessments:  This is part of living under HOA governance and home owners must understand the HOA governing documents were developed with the intention of enforcement.
Now that takes care of enforcement of home owner compliance.  What about when an HOA Board violates the governing documents or even State HOA law?  The rules of enforcement change and home owners begin to understand that enforcement may be a one way street and they are running into oncoming traffic.  The only means of enforcement from the home owner's perspective is our costly, litigious, and time consuming court system.  Most home owners simply can't afford or compete with the unlimited funds of the HOA and their paid attorneys in even the most simple court case.  Yes, lawyers are allowed in Small Claims court.  Furthermore, if the home owner loses they most likely will pay the HOA legal costs.  Under the current environment of HOA litigation most home owners quickly understand that the cost of pursuing a violation by their Board, management company, or HOA attorney far outweigh the benefits and their chances of justice in a "pay to play" court system preclude pursuing their complaint.

HOA home owner complaints simply don't belong in our court system.  They mostly involve violations of HOA governing documents and when pursuing financial losses the amounts are low.  The cases are not complicated and should not require lawyers.   Such cases unnecessarily add to court work load and costs.  What is needed, and has been endorsed by a State sanctioned study on HOA dispute resolution, is the implementation of an out of court binding dispute resolution process.  This venue is affordable, accessible, and provides an environment in which facts and fairness trump financial resources.  It is also a process that is easy to understand, is expedient and simply involves filing a complaint with the State, the complaint is vetted for substance, and a hearing is completed by a State sanctioned med-arb (mediator with arbiter (decision making) authority) trained in HOA law.  If the parties in the complaint can't come to a binding agreement the med-arb will make the binding decision.  In affect, this is what happens in a court venue: someone, the judge, makes a decision and it is enforceable.  The process has a beginning and end all out of court and affordable.  Placing this process into law only awaits legislative sponsors (and overcoming objections from the Community Association Institute (CAI) and lawyers who profit by HOA court actions).

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