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Please note that the following article is strictly to provide information and neither the content nor transmissions through this website
are intended to provide legal or other advice or to create an attorney-client relationship.
When an owner requests an Internal Dispute Resolution (“IDR”) meeting with the Board, the request is often met with animosity or concern. Usually this is because the Board has had prior run-ins with the owner and/or the Board is concerned about a lawsuit. These reactions are understandable, however, if the Board uses this as an opportunity and the IDR process is properly implemented, it can be an effective tool to resolve disputes.
IDR is a dispute resolution process where an owner and the association meet informally to discuss their dispute in an effort to resolve the dispute.The IDR process is outlined in Civil Code §§ 5900-5920. The process requires that: 1) the association must accept and participate in an owner's request for IDR (but the owner can refuse the association's request); 2) the association must designate a director to participate in the process; 3) the parties must meet promptly in a mutually convenient place and time to explain their positions; and 4) the parties must meet in good faith.
1. Participate in Good Faith
The Board should participate and act on the IDR request in good faith. It may be difficult to participate in good faith, if the owner is a well-known complainer or trouble maker in the community. That being said, the IDR will not be successful if there is not a good faith effort, so attempt to wipe the slate clean and go in with an open mind. One way to get over this hump is to select a board member who does not have any negative feelings towards the owner, or who has the least amount of animosity or "history" with the owner. Good faith listening and problem solving is a very powerful tool. The owner will recognize a good faith effort, and if the owner is serious about resolving the dispute, then the owner is much more likely to reciprocate making resolution more possible.
2. Only one Board Member Should Participate
No matter how your Board has handled past IDR requests, the Civil Code requires that the Board appoint only one Board member to participate in the IDR. Additionally, limiting the meeting to one Board member and one owner entire board makes the meeting less formal (as intended) and more likely to resolve the dispute (also as intended).
In spite of the law and benefits, some boards want to participate in the IDR because they do not want to relinquish control or they may be concerned about what the designated director might say or do. The way to handle these concerns is to have the whole board meet before the IDR, review the written request by the owner, discuss the matter and any potential resolution, and identify the board member best suited to participate in the IDR. Once the board member is selected, the board may or may not give that member authority to resolve the dispute. The board may instruct the participating board member to report back with any proposed settlement for the entire board to decide upon. Or, if the IDR concerns a monetary dispute, the board can give the member the authority to settle up to a certain dollar amount. If the board handles the IDR in this fashion, the concerns about bad resolutions will be reduced and the number of disputes that will be resolved will increase.
3. Use a Facilitator
Having an owner or manager facilitate the IDR discussions will help drive a resolution to the dispute. The facilitator's role is to take notes, follow up on issues that were brought up and try to focus in a matters where compromise seems likely. The facilitator should not take sides, and the facilitator can be the board member participant if the board member participant is adept with handling these type of matters.
At the outset of the IDR, the board member participant should explain that the parties are there to focus on the dispute and try in good faith to find a resolution. It is best practice to have the owner start by explaining his or her position and ideas for resolution. The board member should then explain the association's position and ideas for resolution. Finally, the two sides should engage in a dialogue to see whether compromises can be made to resolve the dispute.
In some cases, the board should consider requesting that its attorney participate in the IDR to assist the board member in explaining the association's legal position. The association should let the owner know in advance that its counsel will be present so that the owner can invite his or her attorney to attend. If the association does not have its counsel present, and the owner brings an attorney, it is recommended that the IDR be postponed so that the association can have its attorney present. It is a good practice for the association to ask the owner, in advance, whether he or she plans to bring an attorney.
4. Act Promptly
While the Civil Code does not define what “promptly” means, good practice would dictate that this means not waiting to respond for more than a week, or worse, until the next Board meeting. The longer the Board waits to respond to the owner's request, the more likely the owner will get frustrated, which will hinder a resolution.
The Board can help with this step by adopting an IDR request form. The form should list blank “issues” to be discussed at the IDR so that the owner must think about the dispute and the issues. This will help streamline IDR, but also potentially eliminate red herring issues. The form should also have the owner indicate whether he or she will be bringing an attorney or a third party to the IDR meeting in order to avoid surprise.
The board should take every IDR request seriously, discuss the issue beforehand and enter into the process with an open mind. Also, the board member must be familiar with all of the facts of the dispute, and, if authorized, be ready to enter into a settlement with the owner.
The bottom line is, if used properly, IDR can be an effective tool in resolving disputes.
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