By Will Anderson, Condo Owner Magazine, Volume 18, Issue 2 (Spring 2014)
The allure of the beautiful Gulf Coast and our sugar sand beaches have led many people to purchase coastal condominiums. For most, the condominium way of life was chosen, at least in part, for the freedoms that it provides regarding personal maintenance and upkeep of the property, not to mention the ability to share grand amenities.
These freedoms, of course, are not without boundaries. When searching for a property, condominium purchasers often focus on location, unit size, layout, price and the ability to finance the purchase, with very little attention paid to rules and restrictions that affect their use and enjoyment of their units and amenities.
Once a unit is acquired, condominium owners are subject to statutes and various governing documents, including the declaration, bylaws, rules and regulations, et cetera. Application and enforcement of those mandates is left to the association, or more particularly the board of directors. Such a relationship lends itself to disagreement and disputes. Some people simply do not like being told what to do, despite the fact that they have agreed to live by certain rules, many of which they never took the time to familiarize themselves with. Others may be wronged by improper action or inaction of the board of directors, or even neighboring owners.
Most condominium disputes with the association or its board of directors arise from the failure to follow basic governing procedures, such as holding fair elections for the directors, providing financial information about the association, fairness in application of rules and regulations and resulting penalties, and adopting an annual budget. Disputes among owners typically arise from pets, parking spaces, parties or noise, and personality clashes. In any event, these issues must be resolved, preferably without resorting to litigation, but how?
The first step to resolve such a dispute or disagreement is neighborly communication. If an owner sees a problem perceived to have been created by the board or an owner, he or she should simply approach the board and gently point out the issue of non-compliance and request that it be remedied. If the board fails to respond to an oral request, the new owner should write a clear, brief letter explaining the issue requiring resolution and, if applicable, the section of the declaration, bylaws, rules, or Condominium Act which is being violated. If it involves an issue affecting multiple owners, numbers can be very persuasive, all affected owners should join in this written request for resolution. When dealing with disputes, tone is always important. More can be accomplished if presented as a reasonable request or concern as opposed to the use of combative tone or threats. Remember, there are personalities on both sides. The same applies to a disagreement with an owner. First, owners should try to talk it out. If that does not work, the issues should be presented to the board orally, then in writing.
If the board is unable to resolve the dispute or concern, the next logical step might be mediation. Mediation is an entirely voluntary way of resolving disputes by the use of a third party to assist those involved to negotiate their own settlement or resolution. Mediators typically do not advocate for either side, but in certain instances, the mediator may express a view as to what might be a reasonable settlement. If resolution is achieved, a written, binding agreement is prepared by the parties, not the mediator. Some condominium documents make non-binding mediation a mandatory step in the process of dispute resolution, meaning it must be attempted prior to filing suit. Owners should check thecondominium documents to see if there is a mandatory dispute resolution requirement. If it is not, amendment to the governing documents to include mediation is often a productive endeavor when properly weighed against the time and costs associated with protracted litigation. However, voluntary mediation requires the parties to agree to mediate when they are already in disagreement as to the underlying dispute. If the situation is serious enough, an owner may want to engage a private attorney that is familiar with condominium law to assist with written communications to the adverse party, and to assist with the mediation process.
If efforts toward resolution are still unsuccessful, arbitration may be preferential to litigation because it is often less expensive and much more efficient. Like litigation, arbitration is an adversarial process with each side presenting its position and evidence for ultimate determination by an arbitrator. Generally, matters that are appropriate for arbitration would be disputes about common expenses and related assessments, fines for violation of the rules and regulations or bylaws, damage to common elements, and related decisions made by the board of directors. The parties should agree on a single arbitrator, or they may agree to use a panel of three arbitrators, with the parties selecting one arbitrator a piece, who will then agree on a third to serve as chairman. It is always a good idea to request information regarding a prospective arbitrator’s experience and hourly fee. Once retained, the arbitrator may consider the evidence of alleged violation(s) and the requirements of the condominium’s governing documents and law. The parties may agree, in advance, to be bound by the decision of the arbitrator, or the parties could agree that the arbitration be non-binding. If binding, arbitration can have immediate finality with limited avenues for appeal, thus bringing a swift end to the dispute.
Generally, in Alabama, alternative dispute resolution is not mandatory and persons with disputes can proceed straight to court. Florida, however, requires that certain “disputes” must be submitted to non-binding arbitration within the State’s Department of Business and Professional Regulation before a lawsuit may be filed. That does not mean that every issue or disagreement among owners or with the association must go to arbitration, only “disputes.” Florida Statutes, Section 718.1255 defines “disputes” as any disagreement between two or more parties that involves the authority of the board of directors to require any owner to take any action, or not to take any action, involving that owner’s unit. A dispute also exists where an owner intends to alter or add to a common area or element, or when the board fails to properly conduct elections, give adequate notice of meetings or other actions, properly conduct meetings, or allow inspection of books and records. “Disputes” do not include any disagreement that involves title to any unit or common element, the interpretation or enforcement of any warranty; the levy of a fee or assessment, or the collection of an assessment levied against a party; the eviction or other removal of a tenant from a unit; alleged breaches of fiduciary duty by one or more directors; or claims for damages to a unit based upon the alleged failure of the association to maintain the common elements or condominium property.
In Florida, the arbitrator’s decision is not binding on either party, as long as an appeal is filed in Circuit Court within 30 days of the ruling. Otherwise, the parties are bound by the arbitrator’s decision. In addition, the losing party may be responsible for reasonable attorneys’ fees and costs that the prevailing party incurred in pursuit of the issue.
Both mediation and arbitration have their place. Mediation is the more often used method of alternative dispute resolution because it offers the parties the opportunity to openly discuss a dispute and potentially repair relationships without one side being declared the victor and the other the loser, as is the case in arbitration.
If conflict resolution fails, there is always an option to file suit against the association and its board, or owners, for the failure to enforce or meet obligations under the Condominium Act or governing documents. Litigation is often time consuming and expensive and is typically a last resort to the other options discussed. The court is free to make any decision it feels is appropriate based on the facts as applied to the governing documents, the Condominium Act and State law. Most lawyers, prior to filing suit, will attempt to resolve the matter through negotiation with the threat of litigation as leverage. Cost effective and efficient resolution of the dispute remains the ultimate goal. Litigation against the board or condominium owner (i.e. your neighbors) can be very unpleasant.
Many times, if owners and directors would take a little more time to read and understand their governing document and rules, many disputes could be avoided in the first place, since owners (and guests) would know what they can and cannot do in or around the condominium, and the board would know what is required of it regarding operation and management of the condominium. If a valid rule is in place, every owner must follow it. If an owner disagrees with the rule or its application, it is possible to change the governing documents through proper amendment, assuming enough owners support the change. Likewise, the board of directors must strictly honor its obligations and follow procedures as detailed in the governing documents. If a board member does not like the process or finds it to be inefficient, it is possible to change it through the proper amendment process.
Whatever the nature of the disagreement, alternative dispute resolution is a great way to resolve matters in a more efficient and cost-effective manner while minimizing the adversarial nature of conflict and, hopefully, maintaining good relationships among owners.
Will Anderson is a member of the Baldwin County-based law firm of Daniell, Upton & Perry, P.C. The attorneys in this regional law firm practice in the fields of condominium, construction and insurance law in coastal Alabama, Florida and Mississippi. Contact the firm at P. O. Box 1800, Daphne, AL 36526; Phone: (251) 625-0046; Fax: (251) 625-0464; www.daniellupton.com