Question 1

Are there alternative dispute resolution requirements applicable to owner disputes?

tmgweb · Accepted Answer

Alternative dispute resolution requirements imposed by law, and those imposed by the governing documents, are applicable to owner disputes. For a general discussion of alternative dispute resolution requirements, refer to the question “What are mediation and arbitration, and when are they mandatory.

Question 2

How should the board proceed if it learns of a violation of the HOA governing documents?

tmgweb · Accepted Answer

It is generally the best practice for the association to act each time an owner violates the governing documents. When HOAs ignore minor owner violations, it signals that repeated minor violations, or more significant violations, will be tolerated. This generally leads to more problems in the end.

Question 3

What are mediation and arbitration, and when are they required?

tmgweb · Accepted Answer

Mediation and arbitration are methods of alternative dispute resolution (“ADR”). Their purpose is to save time and money by resolving disputes without going to court. Mediation involves a neutral person who attempts to help the parties resolve their dispute through discussion and compromise. A mediator does not make rulings or decisions. Consequently, mediation is always informal and non-binding. Arbitration involves a neutral person who acts as a surrogate judge. An arbitrator considers the position of each side, and the applicable law then makes a ruling. The parties decide in advance whether the ruling will be binding or non-binding.

Most governing documents require some form of ADR, but there is wide variation regarding the type of ADR required and the situations where the requirement applies. Regardless of what the governing documents say about ADR, there are certain circumstances when the law requires at least an attempt at ADR as a prerequisite to beginning any legal process.

Question 4

Can an owner reduce their assessment by offsetting money the HOA owes them?

tmgweb · Accepted Answer

An owner may not withhold assessments owed to the association on the grounds that the owner is entitled to recover money or damages from the association for some other obligation.

Question 5

What can an owner do if they disagree with the amount of an assessment?

tmgweb · Accepted Answer

Under most circumstances, if an owner disagrees with the amount of an assessment, he/she can pay it under protest. They can then challenge the assessment through a court action or arbitration. If the owner does not follow these procedures or does not pay the assessment, he/she may lose the right to challenge it and be subject to a collection action and/or foreclosure.

Question 6

What happens if an owner doesn't pay an assessment?

tmgweb · Accepted Answer

If an owner does not pay a regular or special assessment, he/she is subject to a variety of fees and penalties. They are also responsible for the association’s attorney fees incurred in debt collection. The association has the power to record a lien against the property. They may also file a lawsuit to obtain a judgment against the owner, and may also pursue foreclosure. This results in an auction-like sale of the delinquent owner’s unit or lot to pay the assessment and the collection costs. If the association obtains a judgment against a non-paying owner, the association can garnish the owner’s wages and bank accounts for collection of the debt.

The association must have a written policy for collecting delinquent assessments. The policy should require immediate and aggressive action every time an assessment is delinquent. This approach avoids the awkwardness of responding to owners who request additional time to pay and avoids creating a perception of leniency or inconsistent treatment. Moreover, in cases where the delinquent owner has also defaulted on his/her mortgage, quick action decreases the likelihood that a mortgage foreclosure will prevent the association from collecting the unpaid assessment(s).

FREQUENTLY ASKED QUESTIONS

LEARN ABOUT

Enforcement and Disputes

Are there alternative dispute resolution requirements applicable to owner disputes?

How should the board proceed if it learns of a violation of the HOA governing documents?

What are mediation and arbitration, and when are they required?

Owner Assessments

Can an owner reduce their assessment by offsetting money the HOA owes them?

What can an owner do if they disagree with the amount of an assessment?

What happens if an owner doesn’t pay an assessment?