Arbitrating HOA Disputes

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When there is a dispute between a homeowner or unit owner and the Homeowner’s Association, mediation or arbitration are popular alternative dispute resolution methods for resolving the conflict.

When a homeowner signs an agreement with the Homeowner’s Association, such agreements usually include an arbitration clause, which states that in the event of a dispute, both parties will settle out of court through arbitration at the beginning of the HOA arbitration process, a homeowner will receive a letter from the HOA stating the intent to arbitrate.  In that letter, the HOA should reiterate the statute that was violated (or alleged to be violated), and offer a choice of several arbitrators from which to choose for the arbitration process.  Many HOA arbitrators are retired judges with experience in the HOA laws of that particular state.  Once an arbitrator is chosen, both parties will present their evidence and statements to the arbitrator in an informal, private setting.

After the HOA arbitrator has heard the details of the dispute, he or she will deliberate a decision based on the evidence received.  The HOA arbitrator will take anywhere from several hours to several days to make the decision, and once a decision has been reached, it is legally binding for both parties.  The decision cannot be overturned in a court of law unless it can be proven that the arbitration clause was unconscionable.

 In HOA arbitration, matters are quickly resolved without having to go to court.  It is also often less expensive than a lawsuit, since defense attorneys are not needed.  However, in most cases, a homeowner will be able to hire his or her own lawyer to help them through the arbitration process.  Since HOA’s often have their own attorneys present, it is a good idea for the homeowner to likewise consider having an attorney there to ensure that they understand everything that is going on in the arbitration process.