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Sunday, September 15, 2013

About the New Required Notice of Voluntary Prelitigation Mediation for HOA and Condominium Disputes

About the New Required Notice of Voluntary Prelitigation Mediation for HOA and Condominium Disputes

All HOAs and condominium associations in North Carolina now have the legal duty to inform all members at least yearly that they have the right to request voluntary mediation of any dispute with the association, except for disputes regarding payment of dues or assessments. Either party can decline to engage in mediation. This requirement took effect on July 1, 2013 pursuant to new statute 7A-38.3F, passed as Session Law 2013-127. You can read the text of the law here: SL 2013-127.

I have opined in a prior post on my blog that this new law was silly and unnecessary because it is completely voluntary, and I stick by that opinion. Anyone can agree to voluntary mediation or arbitration of any legal dispute already, so this law did not add anything new. My law practice certainly encourages these voluntary "alternative dispute resolution", or ADR, processes, and they can be very helpful in resolving legitimate disputes, especially business disputes. Remember, the law specifically states that either party can decline to participate in mediation for any reason, so the law has exactly zero teeth to it.

Anyway, your association now needs to notify its members of this new opportunity to request mediation of any legal dispute, other than a dispute involving the payment of dues. How should it do so? The law states that the notice must be posted on your HOA website, if you have one. If your HOA does not have a website - and it should, this is 2013 after all - the notice must be provided "at the same time and in the same manner as the names and addresses of all officers and board members of the association are published", which is already required by the Planned Community Act and the Condominium Act. (Your HOA is already doing this, right? It should be.) So this usually means within the annual meeting notice for HOAs which do not have a website. The main point is that the notice must be published in writing at least once per year.

So how should the notice be worded? Here is my recommended wording, which you are welcome to use verbatim: "Pursuant to N.C.G.S. Section 7A-38.3F, the association is required to notify its members yearly that members and the association may request voluntary mediation of any dispute with the association arising under the North Carolina [Planned Community Act][Condominium Act] (use whichever is appropriate for your association), or under the association's declaration, bylaws, or rules and regulations, other than a dispute relating solely to the failure to pay dues or assessments. Either party can decline to engage in mediation for any reason. The procedure for requesting mediation is set forth in the statute."

Please give me a call or drop me an email if our HOA law team can assist your HOA or management company in understanding or implementing this new requirement, or if we can be of assistance in any other way. We appreciate your reading our HOA law blog and encourage you to share it with others who may be interested. Thank you!