AB 1738 – WHAT’S THE HUBBUB ABOUT THE NEW HOA IDR LAW IN CALIFORNIA?

WHY DOES THE NEW HOA-IDR LAW IN CALIFORNIA MAKE PEOPLE CRAZY?

IDR stands for internal dispute resolution. It’s supposed to help HOAs resolve disputes that arise between boards and owners by providing a default process that calls for a face-to-face meeting to discuss differences. It could be called “informal” dispute resolution, at least up until now. With the approval of AB 1738 by the California legislature, some say the “informal” process is out the window.

If true, that is unfortunate. If face to face meetings turn into attorneys “going at it” with legal arguments, the value of the “good old sit down and figure out what might work” opportunity is lost.

My experience in over 30 years of doing HOA legal work, performing services as a mediator, and providing solutions is that if the parties are willing to listen to each other, face to face, 90% of the time the “problem” can be resolved! This is the very reason why I took on extensive mediation training about 8 years into my career – I found that more and better solutions happened outside of rather than than inside the courtroom, and for a lot less money. So let’s examine the change in the California IDR law and how the face of it may be changing.

The position of the owners’ group that sponsored the new law is that owners get the short shrift in an IDR proceeding. And I can understand why it feels that way. Often the entire board is present along with the manager, and sometimes the board brings in an attorney, while the owner is only one person, feeling very small. Odds like that create an imbalance. Some owners don’t feel that they have a chance to be heard, unless they can bring a lawyer to speak for them. And some boards wouldn’t allow that. In any case, IDR never has a chance if there isn’t some transparency and honesty about what to expect, and some congeniality and mutual respect for the process itself.

To find out more about this new law and the counterarguments for and against it, and to get some suggestions on how to improve the likelihood of success in any IDR proceeding (which believe me can save your association thousands if you can avoid a court battle), sign up for the E-newsletter right away. On next Tuesday morning the 21st of October – this very subject will be vetted in much more detail.

And stay tuned over the next six months. I will be covering other new laws too, like the changes in the law pertaining to maintenance of exclusive use common area in an HOA.  And then there are the drought related statutes that tie the hands of boards when it comes to punishing owners who let their lawns go brown (feared by some to be the start of the “browning” of California), and preventing owners from “gardening” in their own back yards (the “support local farming” law).

And be sure to check back here frequently for news. And you can also check out the E-News Archives (to see if you can relate to the subject matter) and sign up to get the E-newsletters as they are sent out – for free. There is a sign up box on the main page – as well as lots of other valuable information – at www.californiacondoguru.com.

 

  • Share/Bookmark
6 Responses to AB 1738 – WHAT’S THE HUBBUB ABOUT THE NEW HOA IDR LAW IN CALIFORNIA?
  1. Michael Eugene Foxworth
    October 21, 2014 | 10:21 pm

    How is AB1738 different than mediation where a group of homeowners petition the HOA Board to hear a grievance and resolve a conflict over misapplication of the CC&Rs? We have just been through successful mediation (120+ homeowners against the Board) and we are awaiting final public revelation of the agreement for the benefit of all 1317 homeowners in the association. We also will have to have all homeowners vote approval pending changes to the CC&Rs to make sure the conflict does not arise again. Of course, we had to hire counsel to make the mediation happen and to make our arguments. Until the mediation happened, the Board had refused numerous request to come to the table based upon their erroneous July 2013 action. On a couple of occasions the Board even brought their legal counsel to open forums on the topic to tell us that the Board action was final and we had no option to appeal. That proved not to be true, of course. So, I ask where do legal counselors for HOAs stand today in regard to conflict resolution with or without legal counsel representing the other side?

    • Beth Grimm
      October 23, 2014 | 7:13 pm

      I approved this comment to share the aspect of an IDR with a group of owners. It may be that the Board could have resolved this with less stress by meeting with the owners, or holding a town hall meeting, and let people speak their views. And then make a decision on what action to take. Who can tell – in many cases these kinds of meetings frighten boards, and I also feel that there are too many attorneys ill-equipped to practice the “counselor” side of their position as a professional vs. the “advocacy” side. In some cases advocacy is simply all they know – hit hard and fast – push the envelope because people don’t have the resources to sue – that kind of thinking. It is not in my play book.

      • Michael Eugene Foxworth
        October 24, 2014 | 8:56 pm

        Thank you, Beth. I wish more attorneys in the HOA world had the mindset that you have. We expect to have ongoing issues of transparency, accountability, and due-diligence because the same hostile legal counsel remains on the payroll.

        • Beth Grimm
          October 27, 2014 | 7:40 pm

          Thanks. I appreciate the feedback. I hope things get better.

          • Michael Eugene Foxworth
            October 28, 2014 | 9:44 pm

            Beth, I just had a cathartic moment: It is entirely possible that our problems of the past were NOT DUE to the work of legal counsel, but the failure of our Board to follow the advice of legal counsel. I know that you are not here to give counsel, but I pose the question: When are homeowners allowed to know whether a Board has sought legal counsel, but failed to follow that advice?

            If, indeed, this has happened, then we have a whole set of other problems.

          • Beth Grimm
            December 26, 2014 | 10:15 pm

            I will have to give a lawyerly answer – it depends. Not all lawyers give good advice, and not all boards follow it.