I am a baby-boomer. That means that many of my friends and relatives are at that point in life where they are in the process of, or considering, selling the single family home in which they raised their children and moving to condominium or other type of property where landscaping and common elements are taken care of collectively, together with other owners. Often, a homeowners’ association performs those tasks and manages the community. Sounds idyllic. But the legal consequences are too often the opposite. People who haven’t shared residential property ownership with anyone other than their spouse and children since college — 40 to 50 years ago — suddenly have to relearn what sharing means. And, of course, there is no such thing as a free lunch, so they have to pay for the privilege of sharing. Monthly condo or homeowners’ association fees have to be factored into their budgets, along with special assessments and reserve accounts. When things don’t get done, or get done poorly or late, finger pointing begins. Sometimes, the fingers are pointed at the association’s management, board members or other owners. So much for the idyllic scenario.
When disputes arise between condo or collective homeowners and their association or contractors, litigation frequently ensues. The resulting litigation can be lengthy, acrimonious and costly. Unfortunately, it seems to be rare for a condo or homeowners’ association to have an alternate dispute resolution provision in their declaration, by-laws or rules.
Recently, I have represented several clients in buying and selling condos or homes that are part of an owners’ association. Both parties always want to be sure there are no pending special assessments or delinquent monthly dues. Some lenders (including FHA loans) also want to know if there are any unresolved disputes between other owners in the association, or between the association and any of the owners or outside contractors. The pendency of disputes can make it difficult to sell or finance the purchase of a condo or home unit. So it is in everyone’s best interest to resolve such disputes expeditiously. Therefore, I would not be surprised to see more homeowners’ associations and developers include mediation or arbitration clauses in their governing documents. Even existing developments can change their rules to include such clauses, with the owners’ consent. The sooner and more frequently that occurs, the more likely that our Golden Years will not be tarnished.