When a “dispute” is not a dispute: alternative dispute resolution in community associations in Florida

Article Courtesy of  JDSupra

By Cohen & Grigsby, P.C.

Published January 10, 2020

 

The legal definition of a term often does not precisely match the dictionary definition, leading to confusion for clients and attorneys who do not routinely practice in a particular area of law. The statutory definition of “dispute” for the alternative dispute resolution provisions of the Florida Statutes governing community associations presents such a disconnect between plain English and the law. To complicate matters further, the statutes governing condominium associations and those governing homeowner associations define “dispute” differently for their respective ADR provisions and require different procedures for such differently defined “disputes.”

Chapter 718, Florida Statutes, governing condominium associations requires mandatory nonbinding arbitration through the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (“Division”) of certain defined “disputes” before commencement of a lawsuit. See Fla. Stat. 718.1255. The statute defines “dispute” as any disagreement between two or more parties that involves (1) the board of director’s authority to require any owner to take any action, or not take any action, involving that owner’s unit or the appurtenances thereto, or to alter or add to a common area; (2) the failure of a governing body (such as the board of directors or the association itself) to conduct elections properly, give adequate notice of meeting or other actions, properly conduct meetings, or allow inspection of books and records; or (3) a plan of termination of a condominium. A “dispute” does not include any disagreement that primarily involves title to property, the interpretation or enforcement of any warranty, the levy or collection of a fee or assessment, the eviction or other removal of a tenant from a unit, alleged breaches of fiduciary duty by the board of directors, or claims for damages to a unit based upon a failure to maintain the common elements or association property.

The failure to comply strictly with the mandatory nonbinding arbitration provisions of this statute before filing a lawsuit requires dismissal of the suit, which may result in an award of attorney’s fees against the party who failed to comply with the statute. Although described as “nonbinding”, an arbitration award will become binding unless a party appeals through a motion for new trial, which may result in fee shifting if the party does not achieve a significantly better result at trial.

Unlike condominium associations, Chapter 720, Florida Statutes, which governs homeowner’s associations, only requires arbitration with the Division for election disputes and recall of directors. Arbitrations of those types of disputes are automatically final and binding and cannot be subject to mediation, even if the parties otherwise agree. Otherwise, Section 720.311 defines “dispute” primarily in the context of presuit mediation, rather than arbitration with the Division. The statute requires service of a very specific demand for presuit mediation served by an aggrieved party before filing a lawsuit, but only for disputes between an association and parcel owner regarding the use of or changes to an owner’s parcel or common areas and other covenant enforcement disputes, amendments to the association documents, non-election meetings, and access to the association’s official records.

Disputes subject to presuit mediation for homeowner associations do not include the collection of any assessment, fine, or other financial obligation, including attorney’s fees and costs, claimed to be due or any action to enforce a prior mediation agreement between the parties. Likewise, for any dispute otherwise subject to presuit mediation where emergency relief is required, a party may first file a motion for temporary injunction, but then the Court may refer the parties to a mediation program administered by the courts or under Section 720.311, Florida Statutes. The statute includes specific requirements for the form of the demand for mediation and mediation procedures for disputes that fall under the statute. Failure to comply with these requirements, including refusing to participate in the mediation process before a lawsuit, will not result in dismissal of a lawsuit but may result in a bar to recovery of attorney’s fees in that litigation.

For community associations in Florida, the proper procedure for resolving a dispute can entail very different requirements for condominiums versus homeowner’s associations and compels close attention to the applicable statutes for each type of association.

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