Is mediation or arbitration better for an HOA dispute?

Mediation is usually faster, cheaper and preserves relationships, but it only works if both sides agree to a settlement. Arbitration produces a decision, which can be binding, but gives up many court rights. The right choice depends on the dispute and your documents.

Is ADR required before suing my California HOA?

For many non-monetary enforcement actions, yes. Civil Code section 5930 requires the parties to have endeavored to use ADR first, with exceptions for small claims and, generally, assessment disputes.

In California's pre-litigation process, the parties bear the costs of the ADR. In other settings, cost allocation depends on the provider, the agreement and the governing documents.

Is arbitration binding in Michigan condominiums?

Under the Condominium Act's bylaw provision, a decision is final and binding when the parties elect arbitration and consent in writing. Without that consent, court remains available.

HOA Glossary

Alternative Dispute Resolution (ADR) in HOAs

Alternative dispute resolution (ADR) is a way to settle HOA disagreements without a court trial, most often through mediation or arbitration. A neutral third party helps the association and an owner, or two owners, resolve a dispute over rules, assessments or maintenance, usually faster and with less expense than litigation.

What ADR means in an HOA

Alternative dispute resolution covers any structured process for resolving a conflict outside a courtroom. In community associations the disputes are usually about architectural approvals, rule violations, noise, parking, maintenance responsibility or fines. Because neighbors have to keep living next to one another, a process that preserves the relationship is often more attractive than a lawsuit.

Common forms of ADR

The two forms you will see most often differ mainly in who decides the outcome.

Mediation: a neutral mediator helps the parties negotiate. The mediator does not impose a decision, and a settlement exists only if everyone agrees to it.
Arbitration: a neutral arbitrator hears both sides and issues a decision. Depending on the agreement, the result can be binding or non-binding.
Informal steps: an internal hearing before the board, or a meeting facilitated by the manager, often comes first and may resolve the matter without outside help.

California: ADR before certain lawsuits

California's Davis-Stirling Act includes an article on alternative dispute resolution as a prerequisite to a civil action (Civil Code sections 5925 through 5965). Under section 5930, an association or a member may not file an enforcement action in superior court unless the parties have endeavored to submit the dispute to ADR. That requirement applies only to actions seeking solely declaratory, injunctive or writ relief, or those remedies together with a damages claim within the small claims limits. It does not apply to small claims actions, and, except as otherwise provided by law, it does not apply to assessment disputes.

The process starts when a party serves a Request for Resolution (section 5935). The other side has 30 days to accept, and silence is treated as rejection. If the request is accepted, the ADR must be completed within 90 days unless both parties agree in writing to extend, the parties bear the costs, and mediation communications are protected by the Evidence Code's mediation confidentiality provisions (section 5940). Associations must also give members an annual summary of these rules in the annual policy statement (section 5965).

Michigan: arbitration in condominium bylaws

Michigan's Condominium Act addresses arbitration in the mandatory bylaw provisions. For projects established after the amendment that added the provision, the bylaws must provide that disputes about the interpretation or application of the condominium documents, or disputes between co-owners, go to arbitration if the parties elect it and consent in writing, with the American Arbitration Association's commercial rules applying. Without that election and consent, a co-owner or the association may still go to court, and electing arbitration bars a court petition on that dispute (MCL 559.154(8) through (10)). A separate section, MCL 559.207, lets a co-owner sue to compel enforcement of the condominium documents, so it is a court remedy rather than an ADR rule.

Many other associations use ADR clauses in their own governing documents. Read your documents and consult an attorney before signing an agreement to arbitrate.

This entry is general information, not legal advice. Laws and governing documents vary; ask your association's attorney about your situation.

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