Dispute Resolution : Binding Arbitration

Every dispute in a homeowners association accomplishes one thing - it gives the lawyer the opportunity to transfer a lot of money from the Association's bank account to his own. The lawyer only makes money when there is conflict. A large and rapidly growing number of installment agreements and other types of contracts now specify that dispute resolution must be handled by arbitration. Take a look at a credit card contract. You will most likely find an arbitration agreement. Why? They had enough of paying huge sums to lawyers when an arbitrator ( who is often a lawyer ) could resolve the conflict very quickly and inexpensively. Can we expect the lawyer to give an unbiased opinion about a dispute or resolve it peacefully when the conflict generates enormous revenue for him/her?

There are several ways arbitration and/or mediation could help our Association.

The Following is merely an example of an amendment to our documents specifying how the Dispute Resolution could appear:

Section X.  Dispute Resolution 

1. All disputes between the Association and its members will be decided through binding arbitration by an arbitrator qualified in mandatory Homeowners Association law.

2. The arbitrator will be selected from the current list of Harris County, Texas mediators and arbitrators registered with the Arbitration and Mediation Program who have agreed to hear the dispute.

3. The arbitrator shall be picked by a neutral party chosen at a noticed special association dispute meeting.

4. The neutral party will select the arbitrator's name from a container that contains the names of all qualified arbitrators who have agreed to hear the dispute in the presence of all in attendance at a special meeting.

5. The special association dispute meeting will require no quorum to conduct business.

6. Any of the disputing parties may invite any other witnesses to the special meeting.

7. The special meeting, including the qualified arbitration selection process, may be video taped by any of the disputing parties or their agents.

8. Any of the disputing parties may be represented by anyone at the arbitration hearing.

9. The total cost of the arbitration shall include the cost of representing all of the disputing parties and the arbitrators fees.

10. The total cost of the arbitration and its case documents, including the arbitrator's decision, shall be made part of the associations official records and available to all Members or their agents in the same manner as all other official records.

11. The total cost of the binding arbitration shall be born initially by the association until the decision is rendered on the dispute by the arbitrator.

12. If the final arbitration decision favors the association the members who lost shall be responsible to reimburse the association for 1/2 of the total cost of the binding arbitration.

13. If the final arbitration decision favors the members, the association shall not be due any reimbursement of arbitration cost.

14. If the arbitrator's decision finds that the board of directors willfully or knowingly failed to enforce the association's governing documents then the total cost of the arbitration shall be born by the board of directors.  

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