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ASSOCIATIONS EDUCATION |
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ARBITRATION CASES |
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General Arbitration Information On April 1, 1992, the Division of Florida Land Sales, Condominiums and Mobile Homes began its administration of a mandatory non-binding arbitration program designed to resolve certain types of condominium and cooperative disputes. According to the findings of the Condominium Study Commission, as adopted by the Florida Legislature, a problem existed in the area of condominium and cooperative dispute resolution. More specifically, it was found that unit owners are frequently at a disadvantage when litigating against an association. An association, with its statutory assessment authority, is often more able to bear the expenses of litigation than the unit owner who must rely upon his or her own financial resources to satisfy the costs of litigation against the association. Additionally, the Legislature found that courts are becoming overcrowded with condominium and cooperative disputes, and that alternative dispute resolution was making progress in reducing court dockets and in offering a more cost effective option to court litigation. Accordingly, the Study Commission recommended, and the Legislature adopted, a system of mandatory non-binding arbitration for certain condominium and cooperative disputes. Arbitration is a formal process in which the arbitrator has the authority to decide the dispute in accordance with the arbitrator's perception of the law. Unlike mediation, the arbitrator's decision is not based on the voluntary acceptance of the parties; instead, the arbitrator has the authority to render a decision based on the perceived legal rights of the parties involved. The arbitrator's decision is final and binding on the parties if the parties agree in advance to be bound by the arbitrator's decision, or if the matter is not filed in court for a new trial within 30 days of the arbitrator's decision. DISPUTES ELIGIBLE FOR ARBITRATION Before going to court concerning a dispute subject to arbitration, the parties to the dispute must petition the Division for arbitration. According to the statutes and the administrative rules, disputes eligible for arbitration include those involving the authority of the board of directors under the statutes or association documents to require any unit owner to take any action, or not to take any action, involving that owner's unit or the appurtenances to the unit; as well as disagreements concerning use of the common elements and the board's authority to alter or add to a common area or element. Arbitration is also required for disputes regarding the governing body's failure to do any of the following when required by the Condominium Act, the Cooperative Act, or the association documents: (1) properly conduct elections; (2) give adequate notice of meetings or other actions; (3) properly conduct meetings; and, (4) allow inspection of books and records. DISPUTES NOT ELIGIBLE FOR ARBITRATION Disputes excluded from the program include: disagreements that primarily involve 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; the title to a unit or the common elements; the interpretation or enforcement of any warranty; the charging of a fee or assessment, or the collection of an assessment charged against a party. Also, conflicts involving the failure of an association to enforce, or properly enforce the condominium's documents are not accepted unless the controversy constitutes an eligible dispute as listed above under "Disputes Eligible for Arbitration." Petitions alleging the failure of the association to properly repair, replace, or maintain the common elements, common areas, or association property must include how the owner's use of these areas has been directly affected as a result of the alleged failure. In addition to the classes of disagreements specifically excluded from arbitration, certain types of cases are rejected by the arbitrators because of the lack of a genuine, bona fide, and current dispute. Cases in these categories include so called "moot" disputes, or disputes which no longer present a live controversy. As an example, if the declaration of condominium permits dogs of 20 pounds or less, and a unit owner is keeping a 50 pound dog in the unit, but subsequently permanently removes the dog, any subsequent dispute is rendered moot and is therefore not generally subject to arbitration. PARTIES TO AN ARBITRATION PROCEEDING The only persons entitled to be parties in an arbitration proceeding are unit owners, associations, and tenants where the subject matter of the dispute concerns a tenant's use of the unit. The Division cannot arbitrate disputes between or among unit owners or between a tenant and a unit owner, except where the association is a party and the dispute is otherwise eligible for arbitration. Disputes between a unit owner and a developer or between an association and a developer are not accepted except in a case where the developer is also a unit owner. The board of administration and individual board members should not be named as parties; the proper party to name is the association. In disputes involving tenants, tenants are required to be made parties where the association, through its filing of a petition for arbitration, seeks to have a tenant ordered to comply with the association documents. For example, an association may seek an arbitration order requiring a tenant to cease and desist from disruptive activities. In this case, both the tenant and the unit owner must be named as parties in the arbitration. However, due to a ruling entered by the Fourth District Court of Appeals, the Division is not accepting any cases for arbitration within the Fourth District Court of Appeals, where tenants or other occupants are parties to the proceeding. Cases outside the geographical confines of the Fourth District Court of Appeals involving tenants are accepted, as long as the dispute is otherwise appropriate for arbitration and the relief requested does not included eviction or other removal of the tenant or occupant. ANOTHER ALTERNATIVE--MEDIATION Mediation is a process where a neutral third person acts to encourage and facilitate the resolution of a dispute between two or more parties. The objective of mediation is to help the parties reach a mutually acceptable resolution of their dispute. As a result of legislative changes effective October 1, 1997, if both parties in an arbitration proceeding agree, or if the arbitrator requires it, the dispute will be referred to mediation. Once a dispute has been referred from arbitration to mediation, and if mediation has not resulted in an agreement resolving the dispute, the parties will have the option to remain in arbitration or to terminate the proceeding. If either party does not choose to continue the arbitration proceeding, case will be dismissed and the parties will be free to file the dispute in court. Alternatively, if both parties agree to continue with arbitration, the dispute will be returned to the arbitrator for a decision. Regardless whether the parties request mediation, the arbitrator may also refer mediation cases to the Division's in-house certified mediator who is available to travel to the location of the parties to conduct the mediation session. Theses services are available to the parties without additional costs. The section also maintains the list of paid and volunteer (unpaid) mediators available to mediate disputes referred to mediation. Pursuant to section 718.1255(4), Florida Statutes, a petition for arbitration must include supporting proof that the petitioner provided the respondent with the following: advance written notice of the specific nature of the disputer, a demand for relief, and a reasonable opportunity to comply or to provide relief, and notice of intention to file an arbitration petition or other legal action in the absence of a resolution of the dispute. The failure to include documentation demonstrating compliance with this provision requires dismissal or the arbitration petition without prejudice. Many petitioners fail to comply with the pre-arbitration notice requirement which results in their petition being rejected and dismissed. When a dispute involves more than one respondent, each respondent must be given a pre-arbitration notice. Pursuant to section 718.1255(4)(k), Florida Statutes, the losing party shall pay the costs and reasonable attorney's fees of the prevailing party. In other words, the party that loses the arbitration is required to pay the other party's costs and attorney's fees. Also, as required by rule 61B-45.048, Florida Administrative Code, any party seeking an award of costs and attorney's fees must request the award in writing prior to the rendition of the final order. As such, settlement negotiations are highly encouraged as prevailing party attorney's fees and costs can easily exceed $2,200.00 for simple, uncontested proceedings to $20,000.00 or more for more involved proceedings. Please see Information Sheet on Attorney’s Fees. HOW TO PETITION FOR ARBITRATION If an association or unit owner has a dispute, the first step is to review Section 718.1255, Florida Statutes, of the Condominium Act, or Section 719.1255, Florida Statutes, of the Cooperative Act, if the dispute involves a cooperative association, and Chapter 61B-45, Florida Administrative Code. These references will help you determine whether the dispute is one that must be arbitrated by the Division and whether the parties to the dispute have the right to arbitrate. The next step is to prepare the petition for arbitration. To initiate the arbitration proceedings, you must submit a petition for arbitration on a completed Mandatory Non-Binding Petition form (DBPR form ARB 6000-001). Please ensure you do not use the Condominium Complaint form to initiate your proceeding. The petition will explain the dispute and how you want the dispute to be resolved. It identifies who is involved, and what rule, statute, bylaw, or circumstance is being referenced. The petition must be printed, typewritten, or otherwise in legible form, and must contain the names and addresses of the petitioner, the respondent, and if applicable, the petitioner's representative. If the petitioner's representative is not an attorney, the petition must include a Qualified Representative Application (DBPR form ARB96-002). The petitioner is the person initiating the arbitration proceeding. In those cases where the petitioner is a unit owner, the respondent will be the association. In those cases where the association is the petitioner, the respondent will be a unit owner. Petitions for arbitration must contain a current and complete copy of each condominium or cooperative documents, and a copy of pertinent portions of the documents for each named respondent. These documents are required in recognition of the fact that since an association is governed by its documents, in most disputes it will be necessary to examine the controlling documents. In addition to the items mentioned above, the petition for arbitration must be signed and submitted along with one copy of the petition for each respondent. A check or money order for $50 made payable to the Department of Business and Professional Regulation, Arbitration Section, must also be submitted. This package should be sent to the Division of Florida Land Sales, Condominiums and Mobile Homes, Arbitration Section, Northwood Centre, 1940 North Monroe Street, Tallahassee, Florida 32399-1029. If you need further information or a copy of the arbitration rules, you may contact the Arbitration Section at (850) 414-6867. |