It’s no secret that lawsuits are expensive, acrimonious undertakings that can severely erode both the finances and morale of building communities. When a disagreement between a resident and the board escalates into a serious dispute and the threat of litigation is brought into the mix, it can make a bad situation worse.
There are other alternatives from informal sit-downs between arguing parties to the more formal processes of arbitration and mediation. All are effective methods of resolving conflict without resorting to the courts—the key is figuring out which approach is most appropriate for your particular situation.
What’s The Problem?
Life would be so much simpler if there were no problems between residents and the board or among neighbors. It’s idealistic, but about as far away from reality as you can get.
“There are a number of typical disputes that arise between boards and residents,” says Michael P. Kozek Esq., of the New York City-based real estate law firm Ween & Kozek LLP. “There are disputes over payment of maintenance fees, common charges, assessments, disputes over payment of maintenance for the common areas of the building and disputes about subletting. Then you have disputes regarding sales. If an owner wants to sell their unit and the board may be acting as an obstacle in some way. For example, let’s say the proposed price of the unit is not adequate for the board because they want the value of the unit to be higher. The obstacle can take form by refusing to turn over financial documents to the purchaser or being slow with conducting an interview or reviewing a package that was given to the board that’s necessary for the closing to take place.”
“A lot of the conflict that I’m going to run into is internally with the board or between the board and management,” says Martin F. Scheinman, Esq., and an arbitrator and mediator based in Sands Point. “But in terms of boards and residents there’s always issues that come up about the use of property, complaints to one resident about another, complaints about assessments, maintenance charges or a perception that certain people are getting privileges by members of the board that others are not, whether it’s construction or access to a certain bank of elevators. Those are the things that have come to my attention and over the years I’ve been asked to intercede and try to help.”
“There are also disputes between owners that the owner feels the board ought to do something about,” says Barbara Deinhardt, a New York City-based lawyer and Certified Community Mediator who works extensively throughout the tri-state area. “Such as one owner feels that their neighbor is making a lot of noise or smoking cigars on the deck or causing leaks in the ceiling. Even though it’s a dispute with another owner the owner may think that the board should be doing something about it.”
Get Along or Get a Lawyer
Litigation can be expensive, protracted and anxiety-inducing, but fortunately there is a better way. A few ways actually, including Alternative Dispute Resolution (ADR), which entails bringing in a professional mediator or arbitrator to hear both sides out and help them reach a mutually acceptable agreement. But first, of course, management, or boards themselves in the case of self-managed communities, will attempt to resolve the issue in-house.
The mediator seeks to create a calm, productive environment that encourages listening and understanding by defusing the defensiveness that results from the individuals feeling that they are not getting their needs met.
“Arbitration is much more similar to litigation. You have a third party who has the authority to render a determinative decision after hearing both sides in an adversarial proceeding,” says Deinhardt, “but it’s private and the arbitrator is like a judge but privately retained by the parties but you still have an adversarial proceeding where each side comes in with arguments and documents and witnesses arguing their position.”
Deinhardt also states the advantages of arbitration over litigation is that arbitration is less expensive and more expedient than going to court which can take years and cost thousands and thousands of dollars.
The primary difference between arbitration and mediation is that arbitrators hand down decisions just as judges do which can be challenged under certain circumstances.
“An arbitrator is basically a private judge. He or she is empowered by either a contract or by the parties involved to make a final and binding decision,” adds Scheinman. “Mediation is a process whereby a ‘neutral’ tries to assist the parties as an intermediary to help them reach their own agreement by either speaking with them privately or by diplomacy. Sometimes, they make suggestions, sometimes reframing ideas in a way in which it seems like it’s framed by them.”
“The biggest difference is that mediation is non-binding and arbitration is binding,” says Jeffrey T. Zaino, Esq., vice president of the American Arbitration Association. “With both, the parties can only mediate or arbitrate by joint submission or have a contract requiring mediation or arbitration. If parties mediate, they select a mediator and the mediator then works with them to resolve their dispute (a trained professional guiding them to resolution of a dispute). With arbitration, it is more like a trial in court, but far less formal and expensive, and an arbitrator would hear each side to the dispute and make a binding ruling, an arbitration reward.”
Plan A: Do It Yourself
When a complaint first comes in from a unit owner against another unit owner, management will check to see whether the behavior is in violation of the bylaws, and then if it is, try to determine whether the accused knows it is against the rules. In any case, before intervening in the dispute, the manager might suggest the aggrieved party reach out to their neighbor, politely explaining their discomfort with a particular behavior.
If the behavior persists, and especially if tension escalates, the manager might send a letter to the accused describing the complaint. If the accused is acting contrary to the bylaws, it will demand they stop the behavior—for example, stop playing music loudly after 10:00 p.m.—or face a fine or other sanctions.
Some managers bring the parties together at the first sign of obstinacy. If that happens he manager should set an agenda and guidelines for the meeting and set a tone that encourages safe discussion. If that doesn’t work it may be time to bring in a professional.
“Most building managers or boards will call in a professional when the traditional ways of solving feuds haven’t worked,” says Scheinman, “Whether it’s board meetings or conversations.”
“My view of it is that a board or resident ought to seek a professional as soon as possible,” says Kozek. “Either to get some advice about what their rights are, or whether to involve a professional at all. If the dispute can be resolved very quickly it may not be necessary to bring in a professional but if a dispute becomes heightened then it will be necessary. It makes sense to speak to an attorney early on and perhaps try to work it out between the parties and hopefully find a quick resolution.”
Does it Work?
While there are no hard numbers comparing the results of ADR to those of litigation, one thing is for sure: ADR has the potential to save a fortune. Mediators charge in the range of $200 to $300 an hour, and expert mediators report an 80 to 90 percent success rate.
“I think ADR is extraordinarily effective to solve problems as opposed to sometimes just answering the question,” says Scheinman. “Similarly mediation seems to be less expensive, less formal and less fatalistic. People have a feeling they can be more accomplished and that they are being heard as opposed to some sort of technicality that they don’t understand in the litigation process.”
“The effectiveness of the process is perhaps reaching an agreement and just the fact that the parties are talking to each other is often very beneficial to their relationship even if they don’t solve the particular dispute,” says Deinhardt. “In a co-op and condo dispute mediation more than 80 percent of the cases are resolved. It’s very helpful in cases where the parties have to continue to live together. In arbitration and litigation often one person wins and one person loses. In mediation, a mediator can help the parties find a resolution that can perhaps meet everyone’s needs and lead to an understanding of the position of the other party so the parties are better able to live together.”
Steve Cutler is a freelance writer and a frequent contributor to The Cooperator. Staff Writer Christy Smith-Sloman contributed to this article.