Weinberger Law

How HOAs can handle disputes with members

There are times when a homeowners' association has a dispute with one of its members. When this occurs, there are several steps an HOA can take to find a resolution before the courts or the government need to become involved.

The first steps are usually known as alternative dispute resolution (ADR). If these steps fail, then either the homeowner or the HOA can file a dispute with the Arizona Department of Real Estate.

Alternative dispute resolution

The first step in an ADR is for the HOA to appoint one or two members to meet with the homeowner to negotiate a resolution to the issue. The HOA and the homeowner identify needs and interests and hopefully hammer out an agreement. The homeowner may bring in an attorney but the HOA usually tries to keep this negotiation informal.

If an honest negotiation fails, the next step is mediation. A trained mediator is hired and listens to both the HOA and the homeowner. Using a mediator, both sides can agree on a resolution and nothing is put in writing until both sides reach agreement.

If using a mediator fails, the third step is arbitration. Arbitrators are highly trained legal experts who will listen to evidence and testimony from the HOA and homeowner, then render a verdict.

The purpose of the ADR is to keep lawsuits out of the court and to preserve the relationship between HOAs and their homeowners. If the ADR fails, the state has another option

Homeowners Association Dispute Process

In 2011, the state legislature passed a law to give HOAs and homeowners a venue for disputes outside of the courtroom. The state Department of Real Estate reviews petitions, collects fees and sends the information to the state Office of Administrative Hearings (OAH).

State laws are very clear: Only HOAs or homeowners can file a petition for an OAH hearing. The Department of Real Estate will also check to make sure all other means have been tried - negotiation, mediation and so on - before approving an OAH hearing.

The Department of Real Estate will collect the petition form and the fees - $500 with the form and $500 for each additional complaint up to four complaints. The fees are non-refundable.

The other party has 20 days to respond to the complaint. The complaint is then referred to the OAH and a hearing is scheduled within at least 60 days after the referral.

These steps - negotiation, mediation, arbitration, administrative hearing - are meant to keep costs down and legal intervention low unless there is no other way for HOAs or homeowners to settle their dispute.

An HOA that faces a complaint from a homeowner needs advice from a qualified, experienced attorney to help guide them through the process. Money spent on good advice early is money saved later on representation in a state hearing or in the courts. 

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