All too often, a disagreement between neighbors, or between a board and a resident, goes from minor to heated to nasty—and then turns litigious. Our culture seems all too ready to sue at the drop of a hat, but lawsuits are not only expensive and time-consuming; they can poison the atmosphere of previously harmonious association communities. One way to avoid the swamp of litigation is to use alternative dispute resolution (ADR) to solve differences between parties.

Common Complaints

While human beings are social animals, generally preferring to be in contact with other human beings, we are also a territorial breed. Stacking our housing units on top of each other, or side-by-side, appeals to us in one way, but not in the other. Lines become dotted, and blurred, and sometimes open for interpretation. Some complaints are easy enough to deal with, but some require help from outside the community.

"The most common problem between homeowners is noise," says Philip Alampi with TAP Property Management in Glen Ridge, "but those problems are usually dealt with before we get to ADR."

Other issues, like access to documents, adherence to house rules, e-mail voting, change of use for common spaces and many others may warrant an official action. When two parties cannot agree or come to a settlement, the first thing that may come to mind is generally a lawsuit, but if it is a housing-related dispute, the law in New Jersey says that the homeowners' association must provide ADR.

Another common problem lies in the initial paperwork for many housing associations, says Alampi. "Unit-owner-versus-board is the most common ADR proceeding. It happens because many of the condominium complexes in New Jersey were built so quickly in the late 1980s. They happened so quickly that attorneys were taking documents that other attorneys had used for other developments, without really understanding the project that was being built. Because they used boiler plate information, sometimes the information was not as exact as it could have been, leaving many things available for interpretation."

Arbitration vs. Mediation

The American Arbitration Association (AAA) differentiates between the two like this: "Arbitration is the submission of a dispute to one or more impartial persons (known as neutrals) for a final and binding decision, known as an "award." Awards are made in writing and are generally final and binding on the parties in the case. Mediation, on the other hand, is a process in which an impartial third party facilitates communication and negotiation and promotes voluntary decision-making by the parties to the dispute."

"There is a fundamental difference," says Bruce Freeman, of the law firm of Woehling & Freeman in Westfield, an attorney and an expert on ADR with many decades' experience as a mediator and arbitrator. "Mediation is voluntary and consensual, while arbitration is intended to be final and binding. ADR, as it is commonly known in New Jersey, is intended to be advisory, not binding. If the parties agree that it is binding, then it is, but not unless they agree."

The ADR that applies to housing disputes in New Jersey follows the mediation model, since arbitration is the model that is used in a court, continues Freeman. "It's mostly mediation that I see. If they don't want to go to court, they can hire someone to come in and come to a decision—[an arbitration.]"

Mediation is really the name of the game, adds Alampi. "Mediation used to be just a sit-down-and-talk, whereas arbitration was considered binding. They have become the same in New Jersey, since mediation tends to happen all along the way, usually with the manager mediating between two homeowners."

"You never go to court without going to arbitration first," continues Alampi, and mediation happens "as soon as it is requested by either party."

There are several ways to select an arbitrator or mediator, says Alampi, "Managers who are having difficulties will get a list of people who they would recommend for arbitration, and then they can pick three names." The selection of the neutral is often based on background, continues Alampi. "Sometimes they want an attorney, sometimes they want a contractor, and sometimes they want a manager. If it is between homeowners it is usually good to have a manager because we are familiar with the documents and how to read them."

The New Jersey Community Associations Institute (CAI-NJ) offers an award-winning Alternative Dispute Resolution Program as an alternative to the traditional justice system. CAI-NJ mediators are trained by an education program developed by the chapter. The fee for ADR for CAI members is $250, and $350 for non-members. A list of the available mediators can be obtained by contacting CAI-NJ and completing an ADR Request Form.

Some very effective ADR committees are also handled in-house, adds Freeman. "ADR can be a community committee or it can be farmed out. Both are acceptable. Some intra-community committees can be very creative."

Benefits of ADR

With a backlog of cases in many courts, ADR provides a solution that can save a great deal of time, and a great deal of money, and if the case is of a sensitive nature, privacy can be preserved—something completely unavailable in litigation.

"The benefits of choosing alternative dispute resolution processes such as mediation and arbitration include confidentiality, speed and economy," explains Jennifer J. Coffman, senior vice president of the AAA. "AAA employees and neutrals (i.e., arbitrators and mediators) are held to high ethical standards, including a requirement to protect the confidentiality of the parties and issues in dispute, as opposed to exposure to public court proceedings."

"The intent is to filter out lawsuits," says Freeman. "At a deeper level, the objective is self-governance."

ADR has another benefit, continues Freeman. "When ADR fails, it typically goes to court, where one side will win and one will lose. The beauty of the mediation model is that both sides can win a little."

The amount of money that can be saved is hard to estimate, but it is directly linked to the amount of time an attorney would spend on the hourly clock, month after month, on each side of the case, for what could be many months, and in some cases, years. "The median timeframe from filing to award of a AAA arbitration is less than 10 months," says Coffman. "Cases with smaller claims (i.e., with claim amounts below $75,000) are resolved in approximately five months."

The decision of a neutral can often foretell the outcome of a trial, and ignoring their decision can draw out a case unnecessarily, says Freeman. "I was a mediator in one case that went to trial, then to the appellate division, and after a tremendous amount of money, came to the same decision that we found in mediation. The issue was over a change of use of a grassy area that the board decided would be made into a playground. The decision was upheld that a vote must be taken to change the use of the area, not just a motion by the board."

The Process

At what point does a conflict need a neutral? "Upon request, a mediator must be brought in," says Freeman. "When an association takes action against an owner, the association must put in the letter that the owner has the right to ADR. At that point the owner can request it. If the dispute is between two homeowners, the complaining party can go the association to request ADR."

Here's how the process works:

The mediation starts in one room. The mediator gives each party a chance to state their side of the issue, so that each side can hear the other's position. After the positions are exchanged, parties move to separate rooms, and the mediator shuttles between the two, suggesting the strengths and weaknesses of each side, and narrowing the dispute until they can resolve it. If it cannot be narrowed to an agreement, they can then go to court.

"The meeting is set up outside the public eye," adds Alampi. "Each party gets to go through their concerns, any presentations of evidence in advance. The arbitrators are asked to present their decision in a couple of days. We ask that they deliver the decisions in that time frame so that enough time has passed for due consideration."

"In my experience, the effectiveness of ADR is a mixed bag," says Freeman. "It certainly isn't always effective. People with entrenched positions weaken the effectiveness. Mediation is grounded in compromise, and many times people will go into ADR to win."

With the added pressure of setting a precedent for similar cases in their communities, the board vs. unit owner can be a more difficult set of issues to resolve than issues that arise between neighbors, says Freeman.

Creative Problem Solving

"I have seen many creative ADR committees do great jobs," says Freeman. "One example concerns a dispute between owners on noise. The ADR mediators went to both units and one member went upstairs while one went downstairs, and did an experiment to see what number on the stereo enabled the downstairs neighbor to hear it. They then asked the upstairs neighbor to keep it below a certain number after 10 p.m., for example."

"Another example of creative problem solving concerned the issue of cigarette smoke," continues Freeman, "where neighbors in a side-by-side situation claimed to smell smoke coming through the walls. The committee encouraged the smoker to smoke outside on the porch during the evenings, when the problem was the worst."

As long as people live in close, urban or suburban quarters, disputes are bound to arise. Whether those disputes fester into something worse that then threatens the stability and harmony of a given community or association depends on whether the parties involved can make use of the tools available to them. ADR is one such tool, and can potentially save boards and residents alike both money and time, and can prevent the public airing of private matters. More information on ADR, arbitration and mediation can be found on the Community Associations Institute (CAI) website: www.caionline.org or at CAI-NJ's website, www.cainj.com.

Denton Tarver is a freelance writer, teacher, and professional gardener living in New York City.