THE DEATH OF CONDO ARBITRATION MAY BE NEAR

As you all know, Florida law currently mandates that condominium “disputes” are mediated before arbitrators who are employed by the DBPR, rather than being litigated in a court of law.  Florida Statute 718.1255 states:

LEGISLATIVE FINDINGS.—

(a) The Legislature finds that unit owners are frequently at a disadvantage when litigating against an association. Specifically, a condominium association, with its statutory assessment authority, is often more able to bear the costs and expenses of litigation than the unit owner who must rely on his or her own financial resources to satisfy the costs of litigation against the association.

(b) The Legislature finds that alternative dispute resolution has been making progress in reducing court dockets and trials and in offering a more efficient, cost-effective option to court litigation. However, the Legislature also finds that alternative dispute resolution should not be used as a mechanism to encourage the filing of frivolous or nuisance suits.

(c) There exists a need to develop a flexible means of alternative dispute resolution that directs disputes to the most efficient means of resolution.

(d) The high cost and significant delay of circuit court litigation faced by unit owners in the state can be alleviated by requiring nonbinding arbitration and mediation in appropriate cases, thereby reducing delay and attorney’s fees while preserving the right of either party to have its case heard by a jury, if applicable, in a court of law.

 

            The clear intent of the statute was to try and make the resolution of arguments between an association and an owner inexpensive and quick.  It failed.  Although tens of thousands of Floridians live in condominiums (especially high-rise condominiums) that contain a commercial unit, like a small grocery store, the DBPR made up their own rule that stated any condominium with a commercial unit is not eligible for arbitration and must go to court, immediately alienating thousands.

IN addition, the statute itself was flawed because if an arbitrator referred a case to a mediator, and the case did not settle, either party was now immediately able to discontinue the arbitration instead of the arbitrator simply being required to make a ruling on the case and finish it up.  In other words, all that time and money spent for nothing and now you were off to court anyway.

More recently, cases are dismissed by arbitrators for minor technical reasons often times leaving associations or owners with no remedy to redress violations.

 

 

While this frustration with arbitration continued on the condominium side, the HOA statute got it right.  Instead of requiring disputes to be arbitrated by Tallahassee arbitrators, the HOA statute requires that disputes start at the mediation table, in the county where the association is located and not in Tallahassee, and if not settled, each party can head off to court.

So, enough is enough.  It is apparent that legislation will be filed soon which will totally eliminate the condominium arbitration program.  Instead, most condominium disputes will require mediation while other disputes will be subject to a summary proceeding in a court of law.

In light of the fact that the arbitration program no longer meets the statutory objective of efficient and inexpensive resolution of disputes, and pre-suit mediation often does, this is legislation that makes sense.  I have had the honor of serving as a mediator of condominium and HOA disputes for about a decade now and can tell you that there is almost no fight that shouldn’t start at mediation.  It works.  Not always, but much better that the current arbitration statute.  If and when this new expected legislation is passed, I will certainly let you know.

P.S. Despite the fact that there would no longer be an arbitration program requiring funding, I have not seen or heard about any other pending legislation that would reduce the $4.00 per unit fee required to be paid to the DBPR each year.

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