Appropriate Forum for Condo Association and HOA Disputes in Florida: Arbitration, Mediation or State Court?
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Determining the correct forum for any given dispute involving a Florida condo association or HOA can be confusing. Often times the board members, licensed managers and unit owners are unsure of where a dispute will be resolved if a party initiates formal legal action. Florida’s Condominium Act and HOA Act govern the procedures for community association disputes, and both Acts include arbitration, mediation and state court for resolving various issues. This blog post will provide an overview of the appropriate forum for both condo associations and HOAs to resolve certain disputes in Florida.
Arbitration: The Florida Condo Act, Section 718.1255(1), requires the following issues to be submitted to mandatory non-binding arbitration with the Florida Department of Business and Professional Regulation (“DBPR”):
- The authority of the board of directors to require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto;
- The authority of the board of directors to alter or add to a common area or element;
- The failure of an association to properly conduct elections;
- The failure of an association to give adequate notice of meetings or other actions;
- The failure of an association to properly conduct meetings;
- The failure of an association to allow inspection of its official records;
- The contesting of a plan of termination for a condominium;
- Disputes involving board member recalls. See Stat. § 718.112(2)(j)
State Court: Pursuant to the Florida Condo Act, Section 718.1255, the following disputes are not designated for arbitration and must be resolved through a state court:
- Title disputes for any unit or common element;
- The interpretation or enforcement of any warranty;
- The levy of a fee or assessment;
- The collection of an assessment levied against a party;
- The eviction or other removal of a tenant from a unit;
- Alleged breaches of fiduciary duty by one or more directors;
- Claims for damages to a unit based upon the alleged failure of the association to maintain the common elements or condominium property;
- Any challenge to a final order issued in arbitration;
- An action by a party to enforce an arbitration award in its favor.
- Actions to appoint a receiver to manage the association’s affairs. See Stat. § 718.1124(1).
Mediation: The Condo Act does not require mandatory mediation. However, for arbitration actions either party can request the arbitrator to refer the case to mediation, and if both parties agree to mediation, the arbitrator must refer the dispute to mediation. But even without agreement by the parties, the arbitrator, if he/she believes it is necessary, may refer a dispute to mediation at any time during the arbitration. Fla. Stat. § 718.1255(e).
Arbitration: The Florida HOA Act, Section 720.311, requires the following issues to be submitted to mandatory non-binding arbitration with the DBPR:
- Disputes involving the recall of a board member;
- Election disputes.
Mandatory pre-suit mediation: The HOA Act differs from the Condo Act in that it requires mandatory mediation for the following types of disputes before any action can be filed in state court. See Fla. Stat. § 720.311(2)(a):
- The use of or changes to the parcel or the common areas and other covenant enforcement disputes;
- Disputes regarding amendments to the association documents;
- Disputes regarding meetings of the board and committees appointed by the board;
- Membership meetings not including election meetings;
- Disputes over access to the official records.
Pursuant to the HOA Act, any party who fails or refuses to participate in mandatory mediation is precluded from recovering its attorney’s fees and costs in any subsequent litigation involving the dispute. Fla. Stat. § 720.311(2)(b). If pre-suit mediation is unsuccessful, either party may file the unresolved dispute in state court or elect to enter into arbitration. Fla. Stat. § 720.311(2)(c).
State Court: According to the HOA Act, Section 720.311(2)(a), the following disputes are not designated for arbitration and must be resolved through a state court:
- The collection of any assessment, fine or other financial obligation, including attorney’s fees and costs;
- Any action to enforce a prior mediation settlement agreement between the parties;
- Actions for temporary injunctive relief;
- An action by a party to enforce an arbitration award in its favor;
- Property title disputes;
- Alleged breaches of fiduciary duty by one or more directors.
No matter whether you are an individual member or acting on behalf of the association, you should always consult with an attorney prior to initiating any legal action to determine the correct forum for your specific dispute, to identify any conditions precedent to commencing legal action and for assessing the potential risks of legal action.