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October 22, 2006

AARP: Right to Resolve Disputes without Litigation

[This is Part 2 of a contnuing look of the American Association of Retired Persons (AARP) proposed Bill of Rights for Homeowners in Homeowner Associations]

There are always disputes in associations, and the deck is usually stacked in favor of the association when it comes to enforcing them. AARP's attempt to correct this imbalance creates instead, a nightmare of a bureaucratic process, making sure the owner can drag the process for 3 months or more. In my opinion its designed more to create an atmosphere in which the association doesn't even try to enforce their documents, thereby achieving what the contributors to this article really wish, an association that doesn't do anything.

Look at the process they are pushing:

Before the association can take any action, including fine or correction:

Provide two (2) notices to the owner, at least 21 days apart that describes the offense, state what is due or how to correct,. Also if this is a notice of a late assessment payment, you would have to notify the owner of the right to request an installment program (even if they've mised nly one payment. Describe the services of the ombudsman (assuming eavery state has one) and reference the ombudsman's list of low-cost mediators. The you will have to tell the owner that they have at least 21 days after the second notice to fix the problem, or they appeal it, go to the ombudsman or some other type of alternative dispute resolution, all without the association incurring any legal fees from the association.

Comment: Essentially the owner now has up to 63 days before they have to do anyting,without incurring any costs on their part, no fines, no leagl costs. Of course the association is going to be running up a bill, to be borne by the other owners not in violation of the documents.

Right to a hearing: Homeowner has right, at no cost, to a hearing within 30 days of the notice (or second notice). There's more requirements, ability to postpone, and appeal to the board. The owner, if he loses, has 15 days to fix the issue

Comment: If the owner stops here, the process has now been drawn out up to 108 days. The association will probably have incurred additional costs that it can't recover.
Right to confidential mediation and petition the ombudsman: Owner pays 1/2 the cost, but if the assocaition and owner don't agree on a mediator within 30 days, the owner can contact the ombudsman - which would then extend the period for up to 30 more days or more if the ombudsman requests it. Again, no costs are attached to the owner.
Comment: Now at 138+ days and the association continues to incur additional costss.

Right to extend time to cure: This just says that during the period given to cure or appeal, the association can't incure an attorney fees that would be chargeable to the owner.

Comment: Since they would be respnding to numerous issues and /or ombudsman, the assocaition will, of course, incur legal charges, but under this one, they can't collect them. The rest of the owners get to eat these.

No lawsuit without directors voting - that's the way it usually happens.

Notice before litigation: Puts in another 15 day notice before the association can file suit; describe the basis for the suit, any claims due, who the owner can cure the violation and give otice fo the right to request an installment payment plan for assessments.

Comment: Now at 153+ days and writng the same things to the same owner.
Exceptions for Emergencies: Essentially, if the vioaltion presents a hazard or threat, you can speed things up a little by gettting an injunction or taking temporary enforcement action.
Comment: You still have to go the entire process above, and you get to add the argument of whether it fits the desctiption of an emergency.

Additional right to petition the ombudsman: This one says that if an oner claims his or her statutory rights are being violated, they can petition the ombudsman. However they have to give the directors notice and two weeks to respond. Of course the onwr doesn't have to pay any fee.

Comment: The owner gets 153+ days, the board gets two weeks. . The group behind this would see no unfairness in this.
No additional charges, but additional options allowed: No association may charge homeowners for the exercise of the rights above, but may offer additional options for ADR.
Comment: see below
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Final comments: The intent of this is consistent with a lot of the advocacy sites (whom AARP relied on for most of their material) opinions about document enforcement and "rogue" boards, who use the threat of expensive litigation to run roughshod over the owners. There is also the belief that somehow owners who fall into the "violations" process are deprived of their constitutional rights, and that the table is unbalanced because of the high cost of litigation which the owner would have to bear, while the association uses everyone's money.

In tilting the table the other way, this would instead punish all of the owners for the actions or inactions of a single member, forcing them to absorb all costs, and there will be costs, and dragging out the process potentially for 5 months or more. This proposed section of their "model statute" would call into question one of the basic tenets of associations, that those moving in can expect certain things. Using the advocay sites own methods, take for example the owner, who upon moving in and not bothering to have read the documents, decides to park his RV on the front lawn. Using the above process, it could remain there for almost a half year, at no cost or penalty to him. The other owners could legitimately ask themselves why they should continue to abide by the documents.

The time involved with this could be substantial, and since it would usually involve mangement and the association's attorney, costs will certainly be accumulating throughout the process. There is no provision for the association to recover those costs, even if they win out in the end. All of the owner lose.

Mediators try to settle things, but if the documents clearly state that no RV's can be parked in front of the home, and that nothing can be parked on the front lawn, and the association has the photos to prove it, what is there to mediate? Yet this proposal would require the association to enter into this process. $$$$

Last, this represents a continuing effort to portray the association as something that has nothing to do with the owners. That it is a separate entity that exists only to irritate them. The association is the owners, and it is run by those they elect. The question becomes, who would want to serve as an unpaid board member, if everytime they wnet to enforce the rules, they ran into this. If you're going to drop this on their backs, at least pay them.

Posted by joewest at October 22, 2006 2:32 PM