Neighbor to Neighbor
A Guide to Alternative Dispute Resolution
Can’t we all just get along? It’s a million-dollar question. When people move into a community, they often look for the friendliness and camaraderie that living in an association brings. But with many personalities often butting heads on everyday-living situations, it can often get tense and things can go awry. Neighbors argue with each other, boards complain about residents and residents complain about boards. Minor issues can often be settled quickly and cordially without involving anyone beyond the disagreeing parties. But that’s not always the case. And when it isn’t, things get tricky.
Many disputes can arise between residents. “Animals, what [unit owners] can do in and around their unit, use of common elements and areas,” are some common examples, says Mark Rosen of Goodman, Shapiro & Lombardi, LLC, based in Dedham, Massachusetts. Problems between residents have a greater chance to get resolved quickly, since property managers can act as a third party. A good property manager can use his or her authority within the building to resolve the issue without the need of outside help.
Disputes between residents and boards can get complicated quickly, since emotions can run high if residents feel wronged by a board’s use of their authority. If a resolution can’t be reached, the use of a property manager as a third party can also prove to be problematic, since managers tend to work much more closely with boards, and tend to side with them. Due to such conflicts of interests, the opposing parties will usually seek outside help in such a situation.
In Massachusetts, state law says associations have to follow a special protocol in order to collect overdue common fees. Boards cannot utilize Alternative Dispute Resolution (ADR), or sue unit owners for delinquent payments for common fees. However, boards and unit owners still fall into many other conflicts to dispute in which this clause does not come into play—such as when unit owners unilaterally conduct renovations and repairs and then seek reimbursement from the association, says Rosen.
If two parties can't achieve detente on their own or with the help of their community’s manager, an outside referee or authority may be needed. It’s not always necessary to lawyer up and start litigating, even if early attempts at resolution have been unsuccessful. One effective (and much less expensive) avenue is ADR. There are several ADR options available to help New England residents come to an agreement. But, whomever you talk to you—attorneys, arbitration experts, mediators—they will tell you the same thing: The less willing you are to compromise, the more difficult the process will be. And the longer you hold out, the more you will pay.
The best first choice of ADR options is mediation. “If it’s a dispute of sufficient substance that it warrants a determination by an independent arbiter, go to non-binding mediation first,” says Rosen. “It does give an independent view of the dispute, and it has a psychological impact of—you get your day in court. It’s a cathartic experience for both sides. Without being filtered through a lawyer, the sides come in; whether they have a lawyer present or not, they can tell their story.” And since a mediation agreement is non-binding, if a party is still completely unsatisfied with the results, they can try arbitration. In his own experience, Rosen says he has witnessed an uptick in the use of ADR in the last few years. Some buildings have even included ADR protocol into their bylaws. “[ADR] is a less expensive alternative to resolving a dispute than full-blown litigation. And since the fees that an association pays to my law firm or any other to ‘litigate’ is ultimately paid by the unit owners—it either comes out of their common fees, or an increase in common fees— in order to keep that cost down, wouldn’t you want to use a more economical and expeditious means to resolve a dispute?” says Rosen.
You don’t even need legal representation to go through the mediation process. Unlike litigation or arbitration, mediation still denotes a level of cooperation, since the resolution is legally non-binding. “A mediator tries to negotiate a resolution acceptable to both sides but cannot declare a winner. If the parties have a reasonable likelihood of reaching and sticking to a settlement, then mediation is a good way to facilitate one,” says attorney Adam Cohen of Bridgeport, Connecticut-based Pullman & Comley, LLC.
Mediators charge an hourly rate usually less than or equal to the average rate of an attorney, and the opposing parties split the cost. “Mediation is a voluntary process where a third- party mediator assists the participants in arriving at a solution of their own making. The mediator will help frame comments in a positive fashion, will ensure that each party has his or her say in a neutral fashion and will help participants explore various solutions to the conflict,” says Richard Tillberg, a consultant for real estate developments based in Northampton, Massachusetts and a past board member of the New England chapter of the Association for Conflict Resolution (NE-ACR).
Arbitration involves much more legwork, and often times comes as a last ditch effort to avoid the exorbitant fees of going to court. “Arbitration may or may not be voluntary, and involves an arbitrator who has the obligation to hear all participants and then hand down a decision. Since the arbitrator will make a decision, he or she needs content knowledge but his or her “person skills” are less important,” says Tillberg. In order to enter arbitration, both parties will still almost always need legal counsel and be responsible for the arbitrator’s fee—but it pales in comparison to fees incurred from lawsuits. Unlike mediation, arbitration is legally binding, and once the settlement is determined by the arbitrator, both sides have no right to alter it in any way. They are simply legally obligated to follow it.
All things considered, litigation can be the most destructive, and really only happens when “when either side digs in their heels. I think litigation should be the last alternative, not the first,” says Rosen.
Even though attorneys stand to make less money from it, many will tell you mediation is the healthiest resolution of all ADR options because it can keep neighbors on neighborly terms. “Since litigation and arbitration involve a decision made by a third party, there are winners and losers—not a pleasant prospect for future convivial relations. With mediation, the parties themselves provide the solution. Ideally, neither party considers that he or she has ‘lost’ any more than the other party; therefore, there is a better residual feeling toward each other going forward. Even if the mediation does not produce a ‘solution,’ the fact that the parties have been able to speak to each other—and have heard each other—in a neutral and open setting becomes a solution of sorts,” says Tillberg.
What Does it Cost?
The costs of both arbitration and mediation proceedings are typically miniscule as compared with court litigation. Mediators normally charge about $250 per hour and the case can be resolved in one day. Litigation can last for years and the number of billable hours charged by attorneys can be enormous. And while arbitration can be a big money-saver compared to litigation, it’s still not cheap. Arbitrators might charge an hourly fee similar to that charged by mediators, or a flat rate of around $1,000 for half a day, plus fees for any additional work.
While mediation can often include the counsel of attorneys, it doesn’t have to. That said, many will involve their attorneys at mediation proceedings for the peace of mind even if they don’t play a central role in the process. Since arbitration is binding, both parties will almost always require legal aid. Arbitration tends to last a few days. Some state laws, as in Massachusetts, can require more than one arbitrator to be part of the process, which will notch up expenses overall. Even still, compared to the complicated procedures and high fees that come with a lawsuit, arbitration remains a far lesser evil.
If you’re not prepared to spend $50,000 to $100,000 to go to litigation, you better find an alternative way. Mediation is a very inexpensive way to try and resolve problems. The idea of ADR is that when people start really talking to one another, they understand what’s important and worth fighting for, and what isn’t. There are countless cases of successful mediation and arbitration each year involving arguments between associations and their members. Parking disputes, election disputes, satellite dish cases, landscaping cases and cases of all kinds are successfully mediated and/or arbitrated all the time.
Ultimately, it’s all about talking to one another. Alternative dispute resolution offers that opportunity to talk, listen and live harmoniously in the same community. The best way to resolve a conflict, though, is to avoid ADR altogether. “Boards and unit owners alike need to think carefully about not only which battles are worth fighting, but which battlefields are best to fight them on. People in condominiums often take these disputes to heart because, after all, it’s their home. Many of the most common fights between boards and owners simply are not worth fighting over in any forum,” says Cohen.
Above all, no issue is black and white. Attorneys will tell you that 90% of lawsuits end in a settlement. So no matter how determined and righteous a cause may be, it’s virtually inevitable that there’s going to be a compromise one way or the other. Association boards, property managers and residents alike should know from the start that even if they’re 100 percent right, the satisfaction of an epic victory may never come. The longer it takes to realize this, the more money and personal relationships everyone involved is likely to lose.
Lisa Iannucci is a freelance writer and a frequent contributor to New England Condominium. Editorial Assistant Tom Lisi contributed to this article.