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Association board mistreats homeowners seeking payment plans

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Question: I'm a board director who's not happy with the way our association has been operating. I'm not part of the "majority," so there is little I can do to ensure laws are followed and owners are not mistreated. The manager instructs directors not to make the payment plan process easy and is neither empathetic nor forthcoming. The board has a "take it or leave it" attitude, letting the manager set up a procedure that demeans and humiliates owners, forcing them to beg for payment plans for months on end and increasing the outstanding dollar amount. When owners finally meet the board, they are met with a battery of rapid-fire questions from the manager, forcing them to disclose personal information about themselves before any decision is made. After that meeting these owners are the target of jokes by the board and manager. Owners are unaware they don't have to accept the association attorney's letter of extensive terms and conditions in order to enter into a payment plan. Owners also don't know enough to ask for more amenable payment terms, and the board doesn't volunteer assistance. What can be done about this?

Answer: Every association is required to have an internal dispute resolution (IDR) process or follow the one outlined in the Civil Code. Under Civil Code Section 1363.820, any process used by an association to resolve disputes between it and its members "shall provide a fair, reasonable, and expeditious procedure" for resolving disputes, including payment plans. Owners who believe they were treated unjustly by the association's board and/or its IDR meeting should consider a mediation process outside the association.

Either the titleholder or association can invoke an IDR. The request must be in writing and received by the other party. Although the owner may refuse the association's request to meet and confer, the association must comply with the owner's request to meet.

Next, the board chooses one director to meet and confer with the owner. Civil Code Section 1363.840 states that "the board shall designate a member of the board" to attend. Directors are prohibited from delegating this obligation to meet with the titleholder to anyone, including attorneys or property managers. Remember, the manager is not a member of the board. Also, associations cannot send their attorney to this meeting. If an attorney is present, the owner is not obligated to stay and the meeting has failed to meet the statutory requirements.

The process shall provide a means for the owner and association to explain their positions. Once an agreement is reached, put in writing and signed by the parties, it can be judicially enforced. The titleholder shall not be charged a fee to participate in the meeting process.

The IDR policy must be in writing and followed consistently in every case, or the board must follow the method set forth in Civil Code Section 1363.840.

Pursuant to Civil Code Section 1363.850, the association must distribute to all titleholders its internal dispute resolution rights (IDR) policy annually, including a description of the IDR process, and it must also distribute the alternative dispute resolution rights (ADR) admonition pursuant to Civil Code Section 1369.590.

The board's duty is to act in good faith, explain and assist owners in obtaining an internal payment plan, and ensure the plan meeting is fair and that no owner is debased. There's no reason or legal requirement for owners to disclose any personal information to third parties when seeking a payment plan. Because owners are ridiculed and insulted during the process, your board's IDR is both unfair and unreasonable.

Owners should demand that the board follow procedures set forth in Civil Code Section 1363.840.

The Davis-Stirling Act also provides that the association shall make use of available local dispute resolution programs involving a neutral third party, including low-cost or free mediation programs such as those provided by the L.A. City Attorney Dispute Resolution Program at http://www.atty.lacity.org, the California Department of Consumer Affairs at http://www.dca.ca.gov or the U.S. Department of Housing and Urban Development at http://www.hud.gov.

Glassman is an attorney specializing in corporate and business law. Vanitzian is an arbitrator and mediator. Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or email noexit@mindspring.com.

Copyright © 2014, Los Angeles Times
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