Florida’s condominium laws were amended earlier this year to require that new association bylaws provide for alternative dispute resolution including mediation and arbitration, for many types of disputes. Prior to these latest changes to the state’s laws, condominium associations and unit owners were required to arbitrate these same types of cases with the Division of Florida Condominiums, Timeshares, and Mobile Homes prior to going to court.
Arbitrations under the state agency were a prerequisite to filing suit for condo association/owner disputes that involved or required owners to take any action, or not take any action involving their unit, or to alter or add to a common area. Arbitration was also required for actions involving elections, meeting notices and meeting conduct, requests to inspect records, and condominium terminations.
Instead, the changes now allow condominium associations or unit owners to choose between the state agency’s hearing process or the pre-suit mediation process as required under the state’s HOA laws. All disputes involving elections and recalls must still go to the Division first.
What is the best choice for condominium associations: the arbitration process with the state agency that has been hearing such disputes for many years, or the pre-suit mediation process?
First, some condominium association declarations and bylaws include specific notice and alternative dispute resolution procedures that must followed prior to filing suit against an owner, so there may not be much of a choice in the matter for some communities.
For those that do now have options, they should take into consideration factors such as the the nature and severity of the dispute, and the timeframe for the resolution that they would like to follow.
The arbitration process with the Division of Condominiums typically takes several months to resolve, sometimes longer, after which the losing party still has the right to file an appeal in the circuit court by asking for a trial de novo (new trial).
The pre-suit mediation process provided for under the HOA Act requires those who are initially served with a demand for mediation to respond within 20 days or, if they wish to decline, the association can proceed with filing suit. However, those who fail or refuse to participate in mediation will be unable to recover attorney’s fees and costs in the subsequent litigation, even if they are ultimately the prevailing party.
Costs and legal fees are also important considerations. The arbitration process with the Division is similar to a court hearing process, so costs will be incurred. With the pre-suit mediation, associations will also incur costs, but the other party must pay half of the mediator’s fee. Generally, the pre-suit mediation process costs condominium associations less than the arbitration process with the state agency, and it is also likely to be quicker to reach a final resolution either via the mediation or subsequent litigation.
Condominium associations that wish to resolve disputes with their owners as effectively and reasonably as possible should turn to the guidance of highly experienced community association attorneys. Determining which course to take between the pre-suit mediation or state-agency arbitration will require a careful review of all of the factors and considerations that are at play in a given situation, and associations and their property managers would be well advised to consult closely with extremely well qualified attorneys for such decisions.
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