lt's The Law
Pre-Suit Arbitration May Be Required in Condominiums
I have a dispute with my condominium association and want to file suit. The board of directors told me I cannot file suit, but have to go through arbitration. Can you explain?
In 1990, Florida's legislature created a ten-member condominium study commission. The commission held public meetings throughout the state, which were largely attended by condominium unit owners, some of who served on the board of directors for their association. At those meetings, owners complained that associations were better financed and better situated to pursue court action because court action was expensive and too formal.
The commission recommended providing alternative dispute resolution and the legislature adopted Section 718.1255, Florida Statutes requiring alternative dispute resolution in the condominium setting. Part of that statute mandates non-binding arbitration before suit can be filed. Arbitration is a proceeding in which the parties submit their case for decision by an arbitrator.
In April of 1992, Florida's Division of Land Sales, Condominiums and Mobile Homes ("Division") started its program to conduct the mandated arbitrations. If the dispute falls within the statutory mandate, pre-suit arbitration must be completed before resorting to the courts.
The statute does not require arbitration of all disputes. Disputes that must be arbitrated are limited to: authority of the board of directors to require an owner to take any action involving the owner's unit or to alter or add to the Common Elements; and failure of the association's governing body, when required by the Condominium Act or an association document, to properly conduct elections, give adequate notice of meetings or other actions, properly conduct meetings, or allow inspections of books and records.
The statute makes it clear that mandatory arbitration does not include disputes over title, interpretation or enforcement of warranties, levying of fees or assessments, eviction of a tenant from a unit, alleged breach of fiduciary duty by one or more directors, or claims for damage to a unit because the association failed to maintain the condominium property.
The Division has been called upon to determine if a dispute fails within the statutory mandate. It has accepted cases involving pets, elections and other meetings, changes to common element by either owner or the association, hurricane shutters, parking and vehicles, access to units, floor covering in units, and claims that an owner's actions are a nuisance. The Division claims the arbitration program applies only to residential properties and only to residential units in mixed use condominiums.
Because intent of the Statute is to settle disputes, the Statute mandates that before filing a petition for arbitration with the Division, the party filing for arbitration must provide the other party advance written notice of the specific nature of the dispute, a demand for relief, reasonable opportunity to comply, and notice of intention to file an arbitration petition or other legal action in the absence of resolution. Proof of compliance with those requirements must be part of the initial arbitration filing or the filing will be dismissed.
A petition for arbitration is assigned to an arbitrator employed by the Division. The arbitrator confirms the Division has jurisdiction, and then notifies the other party of the claims. Any answer must be filed within 20 days after the other party receives a copy of the petition from the arbitrator.
Because arbitration is intended to be an inexpensive and quick method for resolution, discovery and filing of motions are discouraged. The arbitrator will schedule a case management conference to set ground rules, a course for the case and, ultimately a final hearing.
Most arbitration hearings are conducted by telephone conference call. Rules of evidence are much more relaxed than they would be in court. In fact, Florida's Administrative Code defines relevant evidence for arbitration cases as such which a reasonable, prudent person would rely on in conducting his or her affairs.
The rules call for a final order to be issued within forty-five (45) days after hearing, receipt of hearing transcript by the arbitrator or receipt of post –hearing memorandum. But, the timing is not mandatory.
If either party is unhappy with the arbitrator's decision, they may file with the court for a trial de novo. That means, the case proceeds as if arbitration never took place. It is not an appeal. The parties must introduce evidence at a trial for ultimate decision by the judge. The judge is not bound by any decisions of the arbitrator.
Attorney's fees and costs are recoverable in arbitration and in any subsequent trial de novo. To recover fees for
trial de novo, a party must actually win which means it must be the prevailing party. The test for determining a prevailing party is easier to meet in arbitration, where if the case ends due to voluntary compliance by one party, the other is prevailing even if no arbitration hearing was required.
Pre-suit arbitration can be a cheaper, simpler method to resolve disputes; but, proceeding without legal counsel may be a bad choice. Although the rules of evidence are relaxed and the proceeding is somewhat informal, presentation of the facts and knowledge of applicable law will be important. If you find you are required to pursue pre-suit arbitration, I suggest you do so with assistance of an experienced attorney.
By: William G. Morris, Esquire
William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.
Questions for this column can be sent to: William G. Morris, e-mail: firstname.lastname@example.org or by fax, (239) 642-0722 or
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