If Your Client’s HOA Doesn’t Have a Formal Dispute Resolution Policy, It’s Time They Made One

More states are requiring homeowners associations (HOAs) to have formal dispute resolution policies in place in order to operate. These policies help HOA members file complaints in their communities and hope for the resolution they are wanting to take care of things like neighbor disputes, issues with fees or noise complaints.

The issue to hold formal dispute resolution policies in place is becoming a state-by-state issue, but there are still some holdouts. Having an updated or new policy can protect an HOA so that liabilities don’t mount, hurting the reputation of an HOA and causing major financial stress. If your client doesn’t have a policy set, it’s time they lay one out. Here’s what some states are doing to handle this issue.

Getting Covered First

Having dispute resolutions standardized will help to alleviate the stress of dealing with complaints and costly claims. It’s a way to protect an HOA in the event of member issue that could possibly get out of hand. Another way to be protected is to invest in an HOA insurance plan, such as Directors & Officers insurance, which can protect members from a myriad of issues like discrimination, breach of contract and mistakes related to governing documents.

The point of having a dispute resolution plan is to handle complaints in an orderly and effective way. Having this supplemental coverage is a way to make sure that additional claims don’t make a big impact on an HOA’s overall operation.

What’s Happening in the U.S.

In Illinois, the state passed a piece of legislation called the Condominium and Common Interest Ombudsperson Act in 2016. The act requires associations to have a complaint policy and dispute resolution form for resolving owners’ complaints and to make the policy available to all owners.

The policy must include a sample complaint form, a description of the process for complaints, a timeline for handling complaints, and a requirement that final decisions be made in writing. The law, which took effect in 2017, requires the ombudsperson to offer training, educational materials, and informational courses to unit owners.

In Florida, the state has its own variation on the laws that have been increasingly effective throughout the country. Florida has a mandatory pre-suit arbitration for condos and mandatory pre-suit mediation for HOA’s. These are related to disputes where a unit owner is wanting to take action with a unit or common elements, or items owned by the HOA.

Associations don’t have to create a formal, written dispute resolution policy all over the country, just in some states like Illinois, but the case can be made to create one as the benefits are related to protecting the integrity of an HOA and the community it represents. Having this kind of policy will help ad a transparency between the association and members.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (877) 807-8708 to speak with one of our representatives.