Mediating Success

Enforcement actions of any kind can cause stress not just for the Board and owner involved, but the community at large.  It is not surprising:  making an owner do something with their property that they do not want to do seems to bring out a level of stubbornness you rarely see outside of politics.  Add to that the fact that, technically, every owner is footing a portion of the bill for enforcement and you have a cocktail for discord.  For these reasons, pursuing compromise, where possible, can not only save an Association time and money, but also save the feeling of comradery that can benefit a community.  Below are some examples from my own practice where a Board and property manager successfully avoided full-blown confrontation through creativity and effort.

Extinguishing the Fire Before it Spreads

Fences, of all things, were a point of contention in this association.  The covenants explicitly prohibited them, and the Board had been faithfully enforcing the same.  The community appeared split on the issue: some owners wanted them for children or pets while others enjoyed the aesthetic of an “open” neighborhood.  Inevitably, one owner went ahead with the “better to ask forgiveness than permission” approach and built a fence.  As you can imagine, this enraged not only those owners who didn’t want fences but also those owners who had requested fences, been denied, and complied with that denial.  After initial attempts to get the fence removed met with flat refusals, counsel was brought in on both sides and the matter seemed destined for a lengthy and expensive trial.

Just before the Board made the call to file suit, we decided to offer one last chance at a face-to-face meeting which had not yet occurred.  The owners of the fence agreed, so long as counsel wasn’t present, and the meeting was set.  It was a resounding success.  Prior to the meeting, the Board had decided to propose to the owner that both sides let the membership of the association decide how to proceed in the form of proposing and conducting a vote on an amendment that would alter the strict covenant and allow fences subject to architectural controls.  The owner agreed, the enforcement action was put on pause, and an amendment was drafted and put to a vote.  In the end, the amendment did not pass and, true to their word, the owner took down their fence.  Despite that, the Board later told me that the owner in question had become a real asset to the community through volunteer work and that allowing the membership to decide instead of the Board had eliminated the ill-will that had begun to accrue during the enforcement process.

The Last-Ditch Effort

A fair-sized community had been in development limbo for years:  developer after developer had gone belly-up without finishing buildout.  Finally, the market began to recover and a final developer was putting the finishing touches on the last phase.  As this was going on, a several-years-long lawsuit was headed towards trial.  A simple assessment collection matter had exploded when the owner brought counterclaims regarding a technical defect in the chain of developer title from years earlier that cast doubt on the title of every lot in the community and almost certainly would have stalled, if not stopped, the final buildout – no small matter and not great for property values.

A few months before trial, the court decided to order the parties to mediation.  Neither side wanted to: the Board feeling that it was a waste of money and the owner maintained that he “wouldn’t give an inch”, but you can’t argue with a court order.  The mediator split the parties into separate rooms after opening arguments.  She returned to our room ruefully shaking her head after presenting our initial (and, in my opinion, very reasonable) offer to the owner.  She said, “I’ve never done this in ten years of mediation, but I don’t think there’s any point in wasting any more time – the owner is unrealistic, and his counsel has no control.”  Both sides left less than half an hour after they’d arrived.

“But wait,” you say, “this is supposed to be a mediation success story!”  Three weeks later, the day before trial, opposing counsel called.  The owner had a “family emergency” and, rather than reschedule the trial, wanted to take up the Association on its settlement offer if it was still open.  It was, and we formally settled an hour later.  If the mediation had never occurred, the framework for that offer would not have existed and both sides would have had to pay for a trial and live with the uncertain result.  The mediation may not have worked while we were there, but it provided the base for a settlement shortly thereafter.

The takeaway from these successes is that there is something about face to face meetings that can result in settling issues without the acrimony of trial.  While it will not always work and is sometimes even inadvisable, a Board should always at least consider advocating for in-person mediation or negotiation.  At the very least, you get the chance to size up the owner and, at best, you resolve the issue and gain a new asset for the Association.