AVOIDING PITFALLS

IN DISPUTE RESOLUTION WITH PROBLEM OWNERS

BY: Sandra L. Gottlieb, ESQ., CCAL, SwedelsonGottlieb

Despite having well drafted, clear and simple rules and regulations, associations are inevitably going to find themselves in the middle of a dispute between a homeowner and the association. How successfully an association resolves such a dispute depends on how well the association has prepared. Being prepared includes forming an effective dispute resolution policy, both internal and alternative, as well as collecting materials and evidence to support the Association’s position, having an understanding of the controlling laws and written communications with the homeowner.

The most important policy an association can have is its policy to act quickly. Prolonging taking action and/or decision making will only cause more frustration for the board, neighbors and the owner who the dispute is with.

Communication

The focus in this article is the problem owner. When dealing with this owner, the theme should be to diffuse, stay disconnected from emotional outbursts, and stick to an agenda for hearings, IDR or ADR.

From the very first communication with the problem homeowner, the association is setting the tone. If the association uses template letters, it is a good idea to make sure that the letters serve the association’s purpose: to obtain understanding and compliance. Never say or write anything that can be used against you and the Association.

To avoid flaming the fire for a problem owner, convey the purpose of the communication which is to investigate if there is a violation or not. Further, the tone of the communication should be aligned with the severity of the problem and may evolve over the course of the ongoing dispute.

There are different types of problem owners, so understanding the various personalities may also help the association to maximize its resolution efforts. Ask the owner to respond in writing about the issue and their objective. Understanding the owner’s intent behind their actions will help guide the board toward a solution and obtaining this information in writing supplies evidence in case the dispute ends up in litigation.

Collecting Evidence

Be organized and start collecting evidence immediately. The Association should have a policy of creating a written file for each violation. The file should include “memos to file” documenting conversations had with the owner, statements from neighbors, copies of all written communications with the owner on the matter and minutes from board decisions on the

Remember, everything the association does will end up being produced as evidence if the dispute ends up in court; that includes executive session minutes of the board. The owner will likely also be building a file on the association so the evidence will be used offensively and likely defensively.

Understanding Laws & Rules

Knowing the law on the disputed issues will enable the association to be confident in its position and portray that it is in control.

An association may not be able to afford to involve legal counsel on every dispute that rises to the level of IDR, but it would be remiss to proceed with a problem owner without counsel. Engaging legal counsel early reduces the likelihood that the association will make any legal mistakes throughout the process. Further, it is imperative that an association have legal counsel present whenever a homeowner has their legal counsel at proceedings. If an owner shows up at a hearing or IDR with their attorney unannounced, postpone the meeting.

Failure to follow California law and the association’s own rules and procedures could result in the association losing its ability to enforce the governing documents against the owner. This was the court’s holding in Ironwood v. Solomon, where an association sued to enforce its architectural guidelines and even though the association was correct about the owner’s violation, the association did not prevail in the litigation as the court determined that the association failed to follow its own architectural policy.

The problem owner will not care if they won a lawsuit because they are right or because of a technicality. To add insult to injury, the association could also have to pay the problem owner’s legal fees if they lose on procedural grounds.

Hearings, IDR & ADR

California Civil Code Sections 5850-5985 provide the homeowner and association a procedure to handle disputes that is “fair, reasonable, and expeditious”. Associations should adopt their own enforcement, IDR and ADR policies that include a Code of Conduct, which establishes, as a requirement, respectful communication by and between all parties .

To aid in diffusing the problem owner when meeting in person, start the meeting by reviewing the association’s intentions and agenda. The following suggestions should be included:

• Review Meeting Code of Conduct

• Briefly describe the violation(s), share evidence, other that the written complaints against the owner about the violation, refer to specific governing document provisions that are violated and state the desired outcome

• Advise the homeowner that the board will listen and then deliberate privately about the violation(s) before sending a letter conveying their decision within the statutory time frame. Then, move directly to the owner’s presentation, keeping in mind this is their opportunity to present their case. The board should stay focused on information gathering and away from sharing their displeasure. No matter what, focus on solutions more than problems.

Not all owners will abide by the conduct rules for the meeting. Therefore, the board needs to focus on staying calm, not argue, and avoid responding in an emotional manner. Be prepared to adjourn the meeting if tempers flare.

Conclusion

In summary, the process for dealing with difficult owners is mechanical. Prepare for disputes, even when your association seems like a nice easygoing community. All it takes is one owner to disrupt that environment. When a dispute arises, act quickly to begin the resolution process. Being consistent, maintaining control of emotions, and following procedures will lead, more often than not, to success!

Sandra L. Gottlieb is the Founding Partner at SwedelsonGottlieb, specializing in the legal representation of community associations, and a principal of Association Lien Services, California’s leader in assessment collections. She can be contacted at slg@sghoalaw.com.