"You can please all the people some of the time, and some of the people all the time, but you cannot please all the people all the time."
There is an abundance of contexts in which this variation of the popular quote by Abraham Lincoln may seem wholly relevant. Its applicability to the inevitable issues which arise out of the unique design of common interest community living is one such example. Faced with the challenge of balancing the management of common elements with the competing interests of various unit owners, Condominium and Homeowners Association Boards often finds themselves in an impossible position. Having disgruntled unit owners is a common and unavoidable phenomenon at most Community Associations. Whether the source of contention is a decision which was made by the Board or whether the Board is simply called upon to act as an intermediary in a disagreement between unit owners, the task is nonetheless a daunting one.
So, what is alternative dispute resolution, and what do Association Boards do when an agreeable solution does not appear to be in sight? The answer, in large part, is dictated by statutory law. The Condominium Act, N.J.S.A. 46:8B-1, et seq. provides in pertinent part, “An association shall provide a fair and efficient procedure for the resolution of housing related disputes between individual unit owners and the association, and between unit owners, which shall be readily available as an alternative to litigation.” Similarly, the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq. has nearly identical language. So what does this mean for Association Boards? Overall, this means that Boards have the obligation to offer alternative dispute resolution (“ADR”) when a “housing related dispute” arises, regardless of whether this requirement is expressly listed in the Association’s Governing Documents.
The term “housing related dispute” is undefined and, therefore, can be open to interpretation. However, it stands to reason that a “dispute” between the Association and a unit owner requires some affirmative action on the part of the Association against the aggrieved unit owner in the form of a restriction and/or penalty. Thus, the Association must be taking some form of punitive action against the unit owner before an alternative dispute resolution must be offered.
In the event that an alternative dispute resolution program is offered, the aggrieved unit owner and the Association have the opportunity to discuss the issues with a neutral mediator with the goal of resolving the dispute voluntarily. The mediator will review the information presented and try to help the parties reach an accord.
In the case of a dispute between unit owners, the Association’s involvement should be limited. The Association should act as a conduit to resolving the matter by providing a forum where that resolution can be made, however the Association should not involve itself beyond that point. The Association should resist the impulse to take sides, regardless of the factual situation presented, unless there are rule violations involved and the Board wants to take a stand.
There are no mandatory procedures for alternative dispute resolution, and the only restriction is the prohibition in the Condominium Act against members of the Association’s Board serving as the mediator. Some Associations have procedures which have already been outlined in their Governing Documents and those procedures should be followed if an ADR is requested. For Associations without ADR provisions in their Governing Documents, it is advisable for the Board to consider a resolution outlining the ADR procedures it intends to utilize. This will place everyone on the same page once an ADR situation arises and will help to keep confusion to a minimum.
It should be noted that nothing prohibits the Governing Documents of an Association from having broader requirements for ADR than are mandated by statute. Therefore, some Association’s may be required to offer alternative dispute resolution in situations that would not typically be classified as “housing related disputes.” For example, an Association’s By-laws may require it to offer ADR before suspending amenities as a result of a delinquency. Although a suspension stemming from a failure to fulfill the contractual obligation to pay common charges would not normally classify as a “housing related dispute” the Governing Documents are permitted to be over-inclusive. Given this, it is always advisable to have a professional review your Governing Documents to ensure your Association’s compliance.