Can’t we all just get along? It's a million-dollar question. When someone moves into a community, they often look for the friendliness and camaraderie that living in a co-op or condo association brings. But with many personalities often butting heads on everyday living situations, it can often get tense and things can go awry. Neighbors argue with each other, boards complain about residents and residents complain about boards. Minor issues can often be settled quickly and cordially without involving anyone beyond the disagreeing parties. But that's not always the case. And when it isn't, things get tricky.
Many disputes can arise between residents—anything from noise and assessments, to common area usage or differing interpretations of bylaws, says Matt Lacy, a liaison for the American Arbitration Association (AAA). Problems between residents have a greater chance of being resolved quickly since property managers can act as a third party. A good property manager can often use his or her authority within the building to resolve an issue without the need of outside help.
Disputes between residents and boards can be more complicated. Emotions can run high if residents feel wronged by a board's use of their authority, and if a resolution can't be reached, the use of a property manager as a third party can also prove to be problematic, since managers by necessity work closely with boards, and may give residents the impression of partiality to board concerns. Due to such conflicts of interests, the opposing parties are often better off seeking outside help in such a situation.
Alternative dispute resolution (ADR for short) has been gaining popularity in recent years as an effective problem-solving method—partly because of its results, and partly because of the logjam of court cases already wending their way through the system. ADR can be a powerful tool to cut through red tape and legal entanglements to get real results. Some states like New Jersey require ADR as an alternative before heading off to court.
While New York doesn’t require it, the New York City Bar Association (ABCNY) offers a program for co-ops and condos, sponsored by its Committees on Cooperative and Condominium Law and Alternative Dispute Resolution.
Mediation is an informal, voluntary approach to settling disputes instead of going to court. A neutral person—a trained mediator—facilitates negotiations between participants in reaching a mutually acceptable resolution to their dispute. Mediation is confidential and non-binding; any participant or the mediator may stop the process at any time. If the participants reach resolution, a settlement agreement will be written and signed and is binding on the participants. The bar association estimates that roughly 75 percent of cases brought before a mediator result in an amicable and enforceable agreement.
Handling it Quietly
The problem-solving process should start with the property manager doing what he or she can to diffuse the situation. Most conflicts—even difficult ones like noise, odor or smoke—can be guided toward a settlement by a competent, level-headed property manager.
“We try to take a holistic approach and find out what the underlying cause of the problem is,” says Marc A. Landis, chair of the real estate practice group at Phillips Nizer, LLP, in Manhattan. “Say, for example it’s a noise problem. The upstairs neighbor might not have the requisite carpet, or the subfloor and floor have become detached and it’s a mechanical problem. Or perhaps we can get the parties to agree that the upstairs neighbor can play their music until 7 p.m., instead of the 9 p.m. rule, because the resident below has young children. You have to find out what the problem is behind the problem and get to a solution that is more practical and, of course, at a lower cost.”
Here in the Big Apple, if two parties can't achieve detente on their own or with the help of their community's manager, an outside referee or authority may be needed. If parties are willing to try ADR, it's not always necessary to lawyer up and start litigating, even if early attempts at a resolution have been unsuccessful.
“The parties are free to select whoever they think would most effectively resolve the dispute among them,” says Eric P. Tuchmann, general counsel and corporate secretary for the AAA. “Frequently, but not always, mediators are selected who have some background in the subject matter of the dispute. So in the case of a dispute involving a cooperative or condominium, the parties may want a mediator with a real estate background. If there are legal issues in disputes, there may be a particular interest in having a lawyer serve as the mediator.”
Tuchmann goes on to say that unlike a judge, a mediator has no authority to bind a party to an outcome. If a solution is reached, a binding agreement is often drawn up, but the mediator has no official power to create that agreement. It must come through the disputing parties. “He or she is there to help them come to their own solution,” Tuchmann says, adding that some forms of ADR “have very limited appeal rights, which makes it an attractive feature for some people because that means they’re not going to have to go through 20 years of appeals.”
Ultimately, unless required by law or mandated by an insurer, it’s up to the parties involved to decide if they are going to create that binding agreement that they both agree to follow. It could be a monetary solution, or something different that satisfies both parties, says Tuchmann.
At the end of mediation, the mediator will either say an agreement has been reached and will help the parties create a binding agreement, or the parties will agree that a solution was not reached, and they may opt to press on with a lawsuit. That’s usually not necessary, however. ADR has shown to be effective in preventing lawsuits up to 85 percent of the time. “To my pleasant surprise, it might look impossible, but if you have them sit in the room and let each other talk, it works,” says Dennis Greenstein, a partner at the Manhattan-based law firm of Seyfarth Shaw LLP.
Taking the Next Step
Despite the impressive success rate of ADR, sometimes mediation alone isn't enough to settle a particularly technical or long-running dispute. “Unfortunately, if the issues are so technical, or people simply can't agree, that's when you see people filing for arbitration,” says Lacy.
Arbitration involves much more legwork than mediation, and oftentimes comes as a last ditch effort to avoid the exorbitant fees of going to court. Unlike mediation, arbitration is legally binding, and once the settlement is determined by the arbitrator, neither side can alter it in any way. They are simply legally obligated to follow it. Though it's not a formal lawsuit, both parties will still almost always need legal counsel in order to enter arbitration, and they are responsible for the arbitrator's fee. It's not cheap, but it still pales in comparison to fees incurred from lawsuits.
The Cost of Compromise
Mediators charge an hourly rate usually less than or equal to the average rate of an attorney—usually around $250 per hour—and the opposing parties usually split the cost. Unlike litigation, which can drag on for years and run up billable hours to an alarming degree, ADR agreement can be reached in as little as one day. “Mediation gets a neutral independent third party involved, where they can confidentially talk to all parties involved and work out a settlement,” says Lacy. “Generally mediation's cheaper, if you're able to get it settled that way. AAA would encourage mediation for these kinds of disputes.”
While mediation can often include the counsel of attorneys, it doesn't have to. Since arbitration is binding, both parties will almost always require legal aid. Arbitration tends to last a few days, and Lacy recommends that a building should establish guidelines on how costs will be covered before, so it's not a sticking point when the arbitration process begins.
To find a mediator and start the process rolling, any party or parties to a dispute may voluntary initiate a mediation under the auspices of the American Arbitration Association (www.adr.org) or work with a private ADR company.
If you’re interested in trying the city bar association’s Co-op & Condo mediation program, there is a $100 non-refundable administrative fee per party, plus an hourly fee for the mediator. Participants can choose a mediator, whose hourly fees typically range from $150-$400 per hour. For further information contact Clare Plunkett at 212-382-6772.
Through the AAA, there is no filing fee to initiate mediation or a fee to request the AAA to invite parties to mediate. The cost of mediation is based on the hourly mediation rate published on the mediator’s AAA profile. This rate covers both mediator compensation and an allocated portion for the AAA’s services. All expenses of the mediation, including required traveling and other expenses or charges of the mediator, are borne equally by the parties unless they agree otherwise. The expenses of participants for either side are paid by the party requesting the attendance of such participants. Private mediation companies may charge differently, so be sure to ask.
There are countless cases of successful mediation and arbitration each year involving arguments between associations and their members. Parking disputes, election disputes, satellite dish cases, landscaping cases and cases of all kinds are successfully mediated and/or arbitrated all the time.
Boards, property managers and residents alike should know from the start that even if they're 100 percent right, they will have to reach a compromise at some point. The longer it takes to realize this, the more money and personal relationships you are likely to lose. Sometimes it’s helpful to give warring parties their “day-in-court” informally without having to actually step into a courtroom. n
Lisa Iannucci is a freelance writer and a frequent contributor to The Cooperator. Associate Editor Hannah Fons contributed to this article.