Alternative Dispute Resolution

Alternative Dispute Resolution

Recommendation

Recognizing that no one community is the same and with a genuine interest in making the ADR procedure accessible and affordable to all owners, CAI encourages community association board members to design ADR procedures most appropriate for the community’s needs in resolving disputes, subject to state law, including any provisions that may be required within the community’s governing documents. Considerations for those procedures should focus on providing a neutral forum that encourages fact-finding and results in a timely, cost-effective resolution. To protect the rights of all parties involved, any legislatively imposed ADR process should provide the following protections for the parties: 

  1. Where possible, utilize an arbitrator or mediator experienced in community association matters.
  2. ADR process should provide for a reasonable time within which to resolve disputes.
  3. ADR sessions should be held in mutually convenient locations for parties.
  4. ADR processes should provide each party with an equal say in the appointment of neutrals.
  5. Although ADR processes may be conducted in confidence, the result should be shared with the members of the association.
  6. The cost of the ADR should be borne by the parties equally, should be reasonable and proportional to the amount at issue in the dispute.
  7. The ADR processes should provide fee waivers for parties that are unable to afford the cost of ADR so that no party is deprived of access to ADR because of its cost.
  8. Any legislatively directed ADR process must provide for the tolling of any statutes of limitation or repose that could jeopardize the association’s claims if the ADR process is unsuccessful.


Summary

CAI recognizes the need for and supports the use of fair alternative dispute resolution mechanisms to resolve disputes arising in community associations, particularly in appropriate cases where such measures can facilitate efficient and equitable resolution. 


Policy

Alternative Dispute Resolution ("ADR") is statutorily required in many states. Even in jurisdictions where ADR is not required by law, the Community Associations Institute (CAI) strongly recommends the adoption of policies within communities to offer ADR as an option to address disputes between individual unit owners and between owners and the association, and in certain cases between associations and external entities, such as developers.

While CAI does not generally advise the intrusion of government institutions into the normal functioning of community associations, a variety of jurisdictions have chosen to adopt a community association ombudsman program; whether their use is advisable or their resources usable depends entirely on how the jurisdiction has chosen to construct the program. 

Disputes subject to ADR may be an appropriate option for a wide range of issues, including interpretation and enforcement of the governing documents and rules, general enforcement of architectural or other violations, and allegations of improper maintenance or infringement of owners’ rights.

However, arbitration is not appropriate for handling the collection of delinquent assessments and may not be appropriate for other matters arising out of contractual obligations, we recommend an internal community ADR process for other disputes prior to pursuit of outside mediation, and participating parties should have the freedom to choose a mediator or arbitrator. This choice ensures that the selected individual has expertise in community association law and is familiar with the types of disputes that are likely to occur.

When deliberating the appropriate ADR method, several factors come into play. First, parties must decide on the type of method, whether negotiation, mediation, or arbitration best fits their needs. Second, identifying the involved parties—such as owners, developers, or associations—is crucial. Such deliberation should always be done post-dispute, and all ADR should be completely voluntary for the parties. 

There are numerous alternatives to be considered when choosing ADR to resolve disputes, and this information can be used as guidance for developing an effective framework for legislation which may best fit the needs of a particular state or jurisdiction as legislators and stakeholders navigate the complexities of effective dispute resolution:   

  • ADR may be either elective (where the parties must opt in to take advantage of ADR) or mandatory (prior to pursuit of litigation).   Where a governmental entity mandates an ADR process, the process should require that all internal association dispute resolution processes first be exhausted.
  • Which parties to disputes can be subject to ADR: owner versus developer, association versus developer, owner versus association, association versus owner, or owner versus owner. Consistent with guidance in CAI’s Protection of Association Claims in Construction Defect Legislation Public Policy, Community Associations Institute (CAI) supports legislation that encourages alternative dispute resolution (ADR) as an acceptable alternative to construction defect litigation. Either party should be allowed to request use of ADR mechanisms as long as it is performed in a reasonable timeframe and under terms that are agreeable to all parties. CAI recognizes the need for and supports the use of fair ADR mechanisms, consistent with its adopted Alternative Dispute Resolution Policy. Any legislatively directed ADR process must also provide for the tolling of any statutes of limitation or repose that could jeopardize the association’s claims if the ADR process is unsuccessful.
  • The process may vary; the mediator or arbitrator may be obtained from the American Arbitration Association, JAMS, the Better Business Bureau or another provider and be conducted in accordance with that provider’s rules.  In some jurisdictions the local CAI chapter offers ADR services.

Community associations should have wide discretion to choose precisely how to implement ADR within their community. Determining the method of ADR may depend on the issues or parties involved or the resources readily available to a particular community.


Adopted by the Board of Trustees, May 6, 1989

Reviewed by the Public Policy Committee, October 6, 1993

Reaffirmed by the Board of Trustees, October 9, 1993

Amended Approved by the Government & Public Affairs Committee, October 17, 2001

Adopted by the Board of Trustees, May 3, 2002

Adopted by the Board of Trustees, March 2011

Revised by the Government & Public Affairs Committee, January 14, 2025

Adopted by the Board of Trustees, January 29, 2025


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