Mediation as a Tool in HOA Conflict Resolution

1. McDonald Mediation Group, LLC Mediation as a Tool in HOA Conflict Resolution A Co-presentation by Robyn E. McDonald of McDonald Mediation Group, LLC and Mark K. Payne of Winzenburg, Leff, Purvis & Payne, LLP MARK K. PAYNEWinzenburg, Leff, Purvis & Payne, LLPmpayne@wlpplaw.com1660 Lincoln Street, Suite 1550Denver, CO   80264303.863.1870     Telephonewww.cohoalaw.com Robyn E. McDonald McDonald Mediation Group, LLC mmg@mmgadr.com8400 East Crescent Parkway, Suite 600Greenwood Village, CO 80111(720) 242-8887www.mmgadr.com

2. McDonald Mediation Group, LLC

3. McDonald Mediation Group, LLC Mediation • A combination of meditation and medication? • Show of hands – who has participated in mediation?

4. McDonald Mediation Group, LLC Mediation – What is it? • Attempt to bring about a peaceful settlement or compromise between disputants • Voluntary resolution • Objective intervention • Use of a neutral party

5. McDonald Mediation Group, LLC Mediation – What it isn’t • Not binding unless the parties reach agreement • Not arbitration • Not a trial

6. McDonald Mediation Group, LLC Types of Conflicts in HOAs • Violations of restrictive covenants and rules • Debt collection – overdue assessments • Conflict between owners; board/owner; board/board member; manager/owner; manager/board

7. McDonald Mediation Group, LLC Mediation – what does the law say? • Colorado Common Interest Ownership Act (CCIOA) • Litigation is a particularly inefficient means of resolving neighborhood disputes • Why? • Cost of enforcement • Complexity • Inherent delay

8. McDonald Mediation Group, LLC Mediation – what does the law say? • Associations are encouraged to adopt procedures that make use of mediation • Can be a pre-condition or alternative to litigation • Encourages associations, owners, managers and declarants to use public and private alternative dispute resolution resources

9. McDonald Mediation Group, LLC Mediation – Adoption of Policy • All associations are required to adopt a written policy setting forth procedure for addressing disputes arising between the association and owners • Must make a copy available to owners upon request • No requirement that policy require mediation – but should you?

10. McDonald Mediation Group, LLC Mediation in the Declaration • Many Declarations, particularly more recent, require use of mediation in at least some cases • Disputes between association and declarant • Disputes between association and owners • Usually an exception for: • Delinquent assessments • Imminent threats to peace, health or safety of community

11. McDonald Mediation Group, LLC Where We Are Headed – HOA Information Office • Develop a referral system for mediation of HOA disputes • “Mediation is an important component of a comprehensive dispute resolution system. Encouraging dialogue and reducing animosity within a community should be a top priority, as it has the potential to not only resolve any given dispute but also increases the chance that future disputes will be handled amicably within the HOA, thus potentially avoiding escalation of additional disputes to the Center. The expense associated with maintenance of the list will be vastly lower than that of an in-house mediation program.”

12. McDonald Mediation Group, LLC

13. McDonald Mediation Group, LLC The Real Source of Conflicts • Primarily emotional context: • Failure to pay assessments (financial hardship – embarrassment) • Failure to pay assessments (a matter of principle – I’ll pay if you finally fix my problem/shut that dog up/ move that RV!) • Escalating neighbor issues: “Barking Neighbors” • Failure to follow CC&R’s – trash, parked cars, barking dogs • Disagreement over political views – tear down brochures • Passive/aggressive behavior – keyed car, trash cans knocked over, dog poop all over lawn

14. McDonald Mediation Group, LLC Additional Sources of Conflicts • Social media gaffes: • Facebook posts/rants • “Nazi” • “Terrorist” • “Tramp”

15. McDonald Mediation Group, LLC Additional Issues That Could Escalate Into Real Conflicts • Fair Housing Act concerns • Requests for reasonable accommodation • Service or emotional support animals (dogs, cats, pigs, horses, reptiles, etc.) • Parking spaces • Marijuana use

16. McDonald Mediation Group, LLC Additional Issues That Could Escalate Into Real Conflicts – cont. • Compliance with restrictions that cause problems • Smoking (cigarettes, marijuana) that creates a nuisance – second hand smoke • Service or emotional support animals that cause – noise? Poop? Fear? • Odors – cooking

17. McDonald Mediation Group, LLC The Cost of Unresolved Conflict • Escalated bad behavior • Community polarization • Toxic gossip • Power grab by certain homeowners or board members • Decreased transparency • Passive/Aggressive behavior (tearing down brochures of the “other side”) • Fiefdoms – Committees of One

18. McDonald Mediation Group, LLC The Cost of Unresolved Conflict – cont. • Selective enforcement of rules/consequences • Communication disconnects between the board/owners/property managers • Personal pain and isolation of elder residents • “I spent the last three days in ICU with my two friends – I don’t have time to deal with this conflict.” • “This is the last home I will own. I don’t want to spend my last years fighting with my neighbors

19. McDonald Mediation Group, LLC The Cost of Unresolved Conflict to the Community • Increased legal fees • Ongoing conflict/distrust • Poor resale value • Poor PR for the community • Toxic environment

20. McDonald Mediation Group, LLC Why Mediation • It’s Efficient • Parties decide when, where, how and to what extent • As courts now order nearly all cases to mediation – it’s proactive, cost effective and saves time

21. McDonald Mediation Group, LLC Why Mediation – cont. • It’s Effective • Parties can resolve one or all of their issues in a time frame that works for them • Parties can resolve certain issues and agree to have others proceed to a judicial determination • May be the first time the parties have viewed the dispute through the other’s eyes

22. McDonald Mediation Group, LLC Why Mediation – cont. • It’s Voluntary • No one is forced to come to agreement • No one is forced to remain in mediation • No one is forced to relinquish their right to proceed to court if they choose or if it make the most sense to have a judicial determination

23. McDonald Mediation Group, LLC Why Mediation – cont. • It’s Confidential • Minimizes “gossip” • Minimizes “public record” disclosure of embarrassing matters • Provides the ability to craft appropriate “public disclosures” while maintaining relevant privacy interests of the homeowner or the community

24. McDonald Mediation Group, LLC Why Mediation – cont. • It’s Future Focused • Assists in determining how parties can work cooperatively going forward • Important when parties will continue to live in same community • It’s not into the blame game – mediators aren’t decision makers and don’t judge anyone • Doesn’t look to resurrect the past any more than necessary

25. McDonald Mediation Group, LLC Why Mediation – cont. • It does not limit the ability to go to court • It’s a chance for the parties to control their own destiny without third party decision maker

26. McDonald Mediation Group, LLC Why Mediation – cont. • It does not limit the ability to seek legal advice • Legal counsel is important to understand rights/obligations • Informed people make better decisions • Informed people are not desperate people – better decisions • Sometimes there’s a need to litigate, but not in every case • Counsel may attend mediation

27. McDonald Mediation Group, LLC Why Mediation – cont. • It’s Binding and Enforceable • Decisions made in mediation and signed by all parties are contracts. • By statute, they are binding and enforceable • They can become judicially enforceable court orders

28. McDonald Mediation Group, LLC How Does it Work? • Mediator – neutral, impartial third party • Works with the disputants to facilitate a dialogue • Find out what the conflict is about • Focuses the discussion on the interests and concerns of the parties, not the blame or threats of future litigation • Provides boundaries and guidelines to allow respectful, productive, forward looking discussion that allows each side to be heard

29. McDonald Mediation Group, LLC How Does it Work? – cont. Where agreements are reached, the mediator helps craft the agreement as the parties want/need, such as: • What will happen • How will it happen • When will it happen • Who will pay • By when will they pay • What happens if they don’t pay • Other aspects necessary to add to the agreement • Other important provisions or terms? • Attorney’s fees? • Non-disclosure/non-disparagementprovision • Deadlines for implementation • How will payment bemade

30. McDonald Mediation Group, LLC How Does it Work? – cont. • If agreements aren’t reached, Mediator can assist in clarifying the issues in dispute, so there is a better understanding of the issues that will proceed to court

31. McDonald Mediation Group, LLC Resistance to Using Mediation for Certain Types of Conflicts • Assessment collection • Attorney fee awards • Threats to peace, health, or safety • Fear of setting precedent • Inability to resolve dispute due to underlying emotional issues

32. McDonald Mediation Group, LLC Concerns with Selective Enforcement • Is there a real concern? • Board ability to exercise business judgment • Avoiding arbitrary enforcement

33. McDonald Mediation Group, LLC Traits of an Effective Mediator Competency • Applies and communicates laws, rules and function of the judicial system • Complies with professional and ethical principles and practices • Assess and manage parties for risk factors before and during mediation • Address diversity of the parties to mediation • Determine and facilitate a process to assist parties reach agreements that work for them

34. McDonald Mediation Group, LLC Traits of an Effective Mediator – cont. • Use appropriate skills to assist parties to participate in an effective mediation • Assist parties to the mediation to develop skills and strategies for managing future disagreements • Communication Skills

35. McDonald Mediation Group, LLC MARK K. PAYNEWinzenburg, Leff, Purvis & Payne, LLPmpayne@wlpplaw.com1660 Lincoln Street, Suite 1550Denver, CO   80264303.863.1870     Telephonewww.cohoalaw.com Robyn E. McDonald McDonald Mediation Group, LLC mmg@mmgadr.com8400 East Crescent Parkway, Suite 600Greenwood Village, CO 80111(720) 242-8887www.mmgadr.com