Whether you are a member of a condominium association or homeowners’ association, the respective statutes require the owners and the association to engage in alternative dispute resolution for certain disputes before a complaint is filed in court. The two types of alternative dispute resolution recognized by the Condominium Act and the Homeowners’ Association Act are (1) mediation, and (2) arbitration. The Condominium Act requires that certain disputes be mediated or arbitrated. The Homeowners’ Association Act requires that certain disputes be mediated.
What is the difference between the two?
Mediation: The process of mediation involves a supervised negotiation process in which a trained, neutral third-party mediator meets with both parties and assists them in exploring possible opportunities for resolving part of or the entire dispute. The mediator has no authority to make any decisions in the matter or to determine who is right or wrong. He/she merely acts as a facilitator to ensure each party understands the position of the other party and that all options for reasonable settlement are fully explored. At the end of the mediation process, the parties will either reach a settlement or an impasse. If there is an impasse, then the parties are free to litigate the dispute in court.
Unless otherwise agreed by the parties, the costs of presuit mediation are shared equally by the participating parties, including the fee charged by the mediator. Depending on the type of dispute, the mediation may require a full day or half a day.
Arbitration: The arbitration process is similar to a court case in that there is an arbitrator whose role is similar to a judge and who makes a decision for one party or the other. If there are material facts in dispute, the arbitrator will hold a hearing which is similar to a non-jury trial, except the rules of evidence are different. For example, in arbitration, hearsay is permissible. The arbitrator may allow the parties to conduct discovery, including taking depositions. If there are no material facts in dispute, the arbitrator may ask the parties to provide written argument, including supporting case law, regarding the legal issues before making a decision.
At the end of arbitration, the arbitrator will send the parties a written decision and will determine who is the prevailing party and non-prevailing party. The prevailing party is entitled to attorneys’ fees and costs to be paid by the non-prevailing party.
In the case of non-binding arbitration, the non-prevailing party may file for a “trial de novo” in circuit court, which then starts the process over again.
Should you Choose Mediation or Arbitration? It depends on the particular case. There are pros and cons to both, and the decision should be made in consultation with your attorney.
