House Bill 278 concerning voluntary prelitigation mediation for disputes in community associations (HOAs and condominiums) was ratified earlier this year. In fact, the new law took effect July 1 and applies to all community association disputes (except for a few exempted ones). Since the law is already in effect, let’s look at some of the questions we’ve already received about the new NCGS § 7A-38.3F. Because circumstances vary and it’s impossible to give legal advice in a short blog, speak with us or another community association attorney if you have questions about the new law.
What’s the purpose of the new law?
That’s a good question. After all, there was no prior prohibition of mediation in community association disputes, whether by statute or typical governing documents. The association or an owner could have always have requested to voluntarily mediate a disagreement. As a result, the new legislation seems more aimed at making sure owners know they have the right to request mediation, rather than creating a new right to mediation.
What are key aspects of the prelitigation mediation law?
- In the event of a dispute, the association or owner may contact the N.C. Dispute Resolution Commission or the Mediation Network of North Carolina for the name of a mediator or community mediation center.
- The mediator must contact the other party, who can decline mediation (i.e., this is a voluntary process).
- If both parties wish to mediate, the mediation must be scheduled within 25 days.
- Regardless of whether mediation resolves the conflict, costs of mediation (including the mediator’s fees) are shared equally between the parties unless agreed otherwise.
Any there downsides to mediation?
While the answer is generally “no,” this statute has language worth noting. As an attorney and Certified Superior Court Mediator (since 1998), I regularly encourage mediation and for parties to attempt to resolve their own disputes. Having said that, the new law provides “[t]ime periods relating to the filing of a civil action, including any applicable statutes of limitations or statutes of repose . . . shall be tolled upon the initiation of mediation under this section until 30 days after the date on which the mediation is concluded as set forth in the mediator’s certification.” Statutes of limitation and repose give finality to disputes by setting the date by which a lawsuit must be filed. Under the new law, if an owner has a potential claim against her association (or the association against the owner) and the deadline for filing a lawsuit is near, initiating mediation would extend any deadlines throughout the mediation process. In the event you have questions about how mediation might affect the filing of a lawsuit, speak to an attorney.
What are the association’s obligations under the new statute?
While mediation is voluntary, the statute mandates that associations notify members each year of the right to initiate mediation. The law provides that the notice should be published on the association’s Web site, and if there is no Website, then forwarded with the names and addresses of association officers and board members as required by NCGS 47C and 47F-3-103.
What language should be used for the notice?
No specific language is required. However, in an effort to mirror the statute as closely as possible (as well as notify the member of potential costs and the association’s right to decline mediation), I would recommend something like the following. Other language could also work.
(Note that the hyperlink to NCGS § 7A-38.3F does not yet include the new language because the General Assembly Website has not been updated to show the new law)
RIGHT TO INITIATE MEDIATION
Pursuant to N.C.G.S. § 7A-38.3F, members are notified that they may initiate mediation to try to resolve a dispute with the association; however, the association may decline mediation. Any costs of mediation, including the mediator’s fees, shall be shared equally by the parties. (NOTE: Disputes related solely to a member’s failure to timely pay an association assessment or any fines or fees associated with the levying or collection of an association assessment are not covered by the mediation statute.)
If you have questions about the new law, here is a link to the ratified bill (since the General Assembly Website does not yet have the new language posted in the General Statutes): http://www.ncga.state.nc.us/Sessions/2013/Bills/House/PDF/H278v4.pdf