Consider When to Use Specific ADR Techniques

Consider When to Use Specific ADR Techniques

Inevitably, in any homeowners association or condominium, there will be community-related conflicts. The bad news for associations when a dispute arises is that going to court can be extremely expensive, and the association might end up paying for litigation costs in the end. The good news when a homeowners association is asked to resolve conflicts is that there are ways to avoid costly legal battles: Alternative dispute resolution (ADR) can address issues that don’t truly require a trip to court.

Associations shouldn’t automatically jump to the two widely known ADR methods of mediation and arbitration when facing a dispute with an owner over whether he owes association assessments or other fees, however. There are ADR techniques beyond mediation and arbitration that can be used in community associations. Conciliation, which is one of the least formal methods of ADR, really just involves a more formalized consultation—a meeting—in an attempt to resolve a dispute.

To use arbitration or mediation to collect assessments would be overly and unduly burdensome and would affect one of the most important things for an association—assessments. So make sure that your association offers ADR in the form of conciliation for assessment disputes, such as those over whether an assessment is owed or the payment was late. (Note, though, that conciliation isn’t useful in cases where the amount is undisputed but an owner asserts that the assessment is illegal.)

During the conciliation process, a homeowner makes an appointment with a member of the management company’s bookkeeping staff and brings with him all of the documentation showing proper payment. The bookkeeping staff member has the association records at hand and is able to compare, on the spot, cancelled checks with the association’s bookkeeping entries.

Conciliation is a productive, but much overlooked, ADR technique in the community association world. It works well because it creates a “meeting of the minds”—the owner and the association’s manager must have all of their data readily available during this conference; if all of the necessary data is together it should be clear exactly what’s owed, if anything, whether late charges were properly assessed, or whether the payment was on time. These issues can all be worked out efficiently using conciliation, rather than the unproductive scenario where a homeowner calls the management company to argue about an alleged discrepancy.

For a detailed explanation of three more ADR techniques and how to use ADR in service contracts, see “How to Avoid Court by Using 'Alternative Dispute Resolution',” available to subscribers here.