An association is required to provide a “fair, reasonable, and expeditious procedure for resolving a dispute” between the association and a member involving the rights, duties or liabilities under the Davis-Stirling Act or the association’s governing documents. (Civ. Code §§ 5900, 5905.) This procedure is referred to as “Meet and Confer” and more commonly as “Internal Dispute Resolution” (IDR). The purpose of IDR is to provide a non-judicial forum to resolve disputes between a member and the association that will not result in a fee or a charge to the member.
Minimum Requirements of IDR Procedure
The IDR procedure established by an association must, at a minimum, satisfy all of the following requirements: (Civ. Code § 5910.)
- Invoking IDR – The procedure may be invoked by either party to the dispute, and a request to invoke the IDR procedure must be in writing. (Civ. Code § 5910(a).)
- Deadlines & Timeline for Action by Association – The IDR procedure must provide for prompt deadlines, and must state the maximum time for the association to act on a request to invoke IDR. (Civ. Code § 5910(b).)
- Participation in IDR – If IDR is invoked by a member, the association must participate in IDR. If IDR is invoked by the association, the member may elect not to participate in IDR. If the member participates but the dispute is resolved other than by agreement of the member, the member must have the right of appeal to the board. (Civ. Code § 5910(c)-(d).)
- Written Resolution is Binding & Enforceable – If a written resolution is signed by both parties to IDR, that resolution is binding and judicially enforceable provided that it is not in conflict with the law or the association’s governing documents. (Civ. Code § 5910(e).)
- Explaining Positions & Attorney Assistance – The IDR procedure must provide a means by which the member and the association may explain their respective positions. The member and the association may be assisted by an attorney or another person in explaining their positions, at their own cost. (Civ. Code § 5910(f).)
- No Fee Charged to Member – A member of the association may not be charged a fee to participate in IDR. (Civ. Code § 5910(g).)
Default IDR Procedure
If an association does not establish its own IDR procedure that satisfies the requirements discussed above, Civil Code Section 5915 establishes the following default IDR procedure:
- The party may request the other party to meet and confer in an effort to resolve the dispute. The request must be in writing. (Civ. Code § 5915(b)(1).)
- A member of an association may refuse a request to meet and confer. The association may not refuse a request to meet and confer. (Civ. Code § 5915(b)(2).)
- The board must designate a director to meet and confer. (Civ. Code § 5915(b)(3).)
- The parties must meet promptly at a mutually convenient time and place, explain their positions to each other, and confer in good faith in an effort to resolve the dispute. The parties may be assisted by an attorney or another person at their own cost when conferring. (Civ. Code § 5915(b)(4).)
- A resolution of the dispute agreed to by the parties must be memorialized in writing and signed by the parties, including the board designee on behalf of the association. That written resolution is binding and judicially enforceable so long as the agreement (1) is not in conflict with the law or the association’s governing documents, and (2) is either consistent with the authority granted by the board to its designee or is ratified by the board. (Civ. Code § 5915(b)(5),(c).)
- A member may not be charged a fee to participate in IDR. (Civ. Code § 5915(d).)
Written Resolution Obtained in IDR
As referenced above, a written resolution signed by the parties to IDR is binding and judicially enforceable provided that it is (1) not in conflict with the law or the association’s governing documents, and (2) is within the board’s authority (or the authority given to the board’s designee) and/or is ratified by the board. (Civ Code §§ 5910(e), 5915(c).)
Attorney Assistance at IDR
As a result of Assembly Bill 1738, the Civil Code’s provisions pertaining to IDR were amended by the California Legislature and the changes which took effect on January 1, 2015 now allow for a member to bring an attorney or other person with him/her to the IDR proceeding in order to assist the member at the member’s expense. (Civ. Code §§ 5910(b), 5915(b)(4).) The Civil Code does not contain any requirement for a member to provide the association with advance notice of the member’s intent to bring an attorney to the IDR proceeding. Many HOA attorneys take the position that having a member’s attorney at an IDR proceeding without also having the association’s attorney present could violate Rule 2-100 of the California Rules of Professional Conduct. That rule prohibits an attorney from communicating with parties whom the attorney knows to be represented by legal counsel. (See Rule 2-100.) Many associations therefore opt to include a requirement in their IDR procedure for the member to provide the association advance notice of the member’s intent to have an attorney present at the IDR proceeding.
- AB 1738. Dispute Resolution.
- Civil Code Section 5920. Notice of IDR Policy in Annual Policy Statement.
- Civil Code Section 5915. Default IDR (Meet and Confer) Procedure.
- Civil Code Section 5910. Internal Dispute Resolution (IDR); Requirements.
- Civil Code Section 5905. Procedure for Resolving Disputes.
- Civil Code Section 5900. Applicability to Disputes Between Association and Member.
AB 1738 Signed: HOAs Set to Incur Greater Attorney’s Fees to Resolve Member Disputes via IDR | From HOA Lawyer Blog, published by Tinnelly Law Group, October 14, 2014