Indiana – mandatory HOA mediation legislation (April 2019)

 

By Deborah Goonan, Independent American Communities

 

This year, Indiana Legislators are considering an important bill related to homeowners and condominium associations disputes.

Many HOA disputes result in an impasse. That is, the association’s internal dispute resolution process is rejected by one or both parties, or the dispute cannot be resolved.

When that happens, current statute in Indiana gives both parties the option of resolving their dispute through either mediation or binding arbitration, before commencing a lawsuit.

HB 1138 proposes that, if either an HOA or a homeowner requests mediation, the other party is mandated to submit to mediation before either party can file a lawsuit in civil court.

Traditionally, the mediation process is voluntary and non-binding.

Mediation differs from Arbitration, in that a Mediator does not decide who is “right” or “wrong.” Instead, the goal of mediation is to facilitate communication so both sides can agree on a reasonable settlement to their dispute.

Mediation is almost always confidential, with no public record of the details of the dispute or settlement reached by the parties.

The proposed dispute resolution process is a bit radical, because it allows one party to force the other to attempt mediation. There would be no regard for mutual willingness to discuss settling the disagreement in good faith.

Arbitration, binding or non-binding, is removed as a pre-litigation option for HOAs and homeowners.

 

Selection of Mediator

The bill states that an “impartial mediator” would be “selected by the American Mediation Association (AMA) from a current listing of mediators from the National Academy of Distinguished Neutrals (ADN).”

Each party would be required to pay their own legal expenses related to mandatory mediation, including the party who didn’t request mediation, and sees no value in attending.

Critics of HB 1138 say that, if enacted as law, homeowners would be forced to spend hundreds to thousands of dollars before filing a legal complaint against their HOA.

Mediator rates for Indiana start at $200 per hour, plus travel expenses. Most mediation sessions last 4 to 8 hours.

Those in favor of the bill say that Mediation is more cost-effective than civil litigation, and breeds less hostility in the community.

 

 

About AMA and ADN

Based in Texas, AMA is founded by Robert E. Smith. Smith has extensive experience in mediation and arbitration in several states, and appoints dozens of mediators to handle a variety of cases across the U.S.

Smith would choose a mediator for each HOA or condo dispute from a list of mediators in Indiana, who are members of National Academy of Distinguished Neutrals. Currently, 40 qualified mediators are listed for the Hoosier State.

Six of the mediators on the ADN list have experience in community association dispute resolution: Sam Ardery of Bunger & Robertson; Tim Born of Terrell, Baugh, Salmon & Born LLP; Kevin Fitzharris of Barrett McNagny LLP; Daniel Sigler of Sigler Law, LLC; Irvin Sonne of Sonne & Sonne Law Offices, PC; Scott Krouac of Wilkinson, Goeller, Modesitt, Wilkinson et.al.

 

When mediation fails

A dispute can proceed to litigation if neither party requests mediation, or if the dispute is still unresolved following mediation.

If a settlement is reached at mediation, it must be written and recorded. But if one party fails to abide by the agreement, the dispute can proceed to civil court.

One important consideration is whether mediation is suitable for the nature of the HOA or condo dispute, or merely a delay-tactic for the association to avoid complying with state law.

A typical example of a dispute that is unsuitable for mediation, in my opinion: the Association’s reluctance or refusal to provide access to financial records, meeting minutes, or a roster of all members in the association.

However, if both parties come to the table in good faith, mediation could prove useful in resolving disputes over architectural standards or alleged violations of covenants, restrictions, and house rules.

Reference: The bill has passed in the House 263 – 95, and has been referred to the Senate Committee on Judiciary.

Track the status of  HB 1138

Authored by Rep. Woody Burton (R) Rep. Ryan Dvorak (D), Rep. John Young (R), Rep. Gregory Steuerwald (R)

Sponsored by Sen. Aaron Freeman (R)

Read the latest version of HB 1138