HOA Arbitration is not free: it has its costs, too

I’ve often wondered why so many are turning to arbitration as a means of settling HOA disputes, and to avoid court costs. The persons in the know say arbitration is generally cheaper, but an arbitrator can cost $1,000 -$4,000 per day, plus an initial filing fee around $750 with additional administrative costs.

Arbitration relies on one very important factor as applied to rogue HOA boards: both parties must be open to working together for a resolution to the problem. That’s a contradiction from the start: “rogue” and “working together.”

If minimal costs are acceptable and you have a truly workable Board, then this is a possibility. However, understand that there are conditions that can leave you without recourse to an appeal, not only to the decision but to the costs being charged.

As for those outlandish court costs in the tens of thousands or more, it goes without saying you are dealing with a hostile Board and arbitration will get you nowhere.  In the arbitration process, your HOA can still hire attorneys to represent them, and guess who pays for them? Not according to the arbitration process, but because of your CC&Rs make it clear that your HOA costs are paid by homeowner.

Find out more about how to make arbitration work for you. Read articles in the Notes 1 and 2 below.

Notes

[1] “Arbitration Pros and Cons”, Nolo.com.

[1] How much does arbitration cost, and who pays?, Legal Nature.

Published in: on January 30, 2019 at 12:10 pm  Comments (4)  

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4 CommentsLeave a comment

  1. According to the Nolo reference article …”parties sometimes agree to keep the proceedings and terms of the final resolution confidential. ”

    In HOA-ville, this seems to be the norm. The HOA demands confidentiality, or they won’t agree to mediation or arbitration.

    And in Pennsylvania, before a homeowner can file a complaint with the Attorney Generar, s/he is now required to go through ADR (arbitration or mediation) if the HOA has a written dispute resolution process.
    Of course, HOA attorneys are now advising all their boards to create an ADR procedure, in order to head off AG complaints that would become public record.

    And that’s the goal — don’t let the home buyers and homeowners know what a bad deal they get with an HOA. And don’t let them know when homeowners are actually “winning” their cases, either.

    Better to keep the public blissfully ignorant?

    Mediation and Arbitration might have some value where both parties are equal peers — two neighboring homeowners, or a couple going through a divorce. But the process cannot work when one party has a money and power advantage over the other, as is the case with 99% of HOA disputes with homeowners.

  2. I’m a serial entrepreneur with 60 years time in gad. Learned a long time ago that the arbitration system is geared to those who use the service the most as arbitrators soon learn if they rule against the powers that be they get no more jobs.

  3. Mediation or arbitration is a joke. The attorneys call it Binding Mandatory Mediator whatever that is supposed to mean. However, when a HO calls for the same thing, the board and attorney just snub their noses at the Member. It’s another imitation tactic and IMHO you should not partake. Always seem willing to partake but raise huge red flags about what the Board is unlikely to abide with, how will they comply, how will the next board comply in the future? Remember you are dealing with cheats and liars and that will NOT change after Mediation. After all if they won’t follow governing docs, state statutes, settlement agreements etc why the heck would anyone ever thing they would follow a mediation agreement. And the MC will always lie for them. F*** HOAs.

    • Your sentence “After all if they won’t follow . . .” hits the nail on the head! The solution to HOA abuse is for state legislatures to hold HOAs accountable under the restrictions and prohibitions of the state and US Constitutions. And to provide meaningful enforcement that will serve as an effective deterrent to such future actions.

      Why is everybody so happy with HOAs, according to the CAI polls? It’s obvious. They are “getting away with murder.” They have a good thing going for them! Evan McKenzie wrote in his 1994 book, Privatopia,

      “HOAs currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent of local governments.”

      No penalties! No personal penalties against wrongdoing directors! Shameful! Really shameful!


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