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Feldsott Lee Pagano & Canfield
Orange County Homeowners Association Law Firm

NEW DAVIS-STIRLING AMENDMENT: LAWYERS & ADVISORS MUST BE ALLOWED IN IDR

Though you might not believe it, disputes arise between homeowners associations and their members. Yes, it's true. The Davis-Stirling Common Interest Development Act ("the Act") requires associations to provide for an internal dispute resolution process ("IDR") meant to be relatively informal, cost-free and expeditious. The default IDR provided for in Civil Code §5915 requires that if a member makes a written request for IDR to an association, then the association's board must designate a director to promptly meet with the member at a convenient time and place, that each of the parties explain their positions to each other, and that they confer in a good-faith attempt to resolve the dispute. The Code also provides that the association may not charge a fee for participation in the IDR, and that each party must absorb the cost of their own counsel. Civil Code §5900 et seq. contemplates the welcome prospect that a quick and civil conversation between one director and a member will lead to a fair resolution of a dispute without having to incur the expense and adversity of litigation or alternate dispute resolution ("ADR").

In what turned out to be a controversial move, §5900 et seq. was recently amended to provide that parties to an IDR may bring attorneys and other advisors to the IDR meeting. Even before the amendment was passed, nothing in the Act forbade parties from brining their counsel to IDR meetings, and it has not been uncommon for parties to invite their counsel to attend. Although involving attorneys increases the cost of an IDR, oftentimes the involvement of attorneys increases the chances that a resolution can be found during the IDR process, thereby allowing the parties to avoid expensive litigation or ADR. Thus, involving attorneys during IDR in more contentious or complicated disputes may actually save the parties money in the long run. Nevertheless, some associations have enacted IDR procedures forbidding the presence of attorneys at IDR meetings. The recent amendment to the Act no longer allows such restrictions.

Many have voiced concern that the new amendment, in effect, will ensure that no IDR will occur without the presence (and expense) of an attorney. If each party knows the other has a right to bring counsel, then each is likely to bring his own counsel to "even the playing field". The new amendment sets up a classic prisoners' dilemma scenario that seems to ensure a lose-lose outcome. However, there is a solution to the dilemma for the cost-conscious association. Civil Code §§5905, 5910 allows associations to enact their own customized IDR procedures, and nothing in the new amendment forbids an association from requiring a party to give notice if they plan to invite their attorney. Enacting such a notice provision will allow the parties to avoid having to preemptively hire legal counsel for each and every IDR process, and allows for the possibility of that simple, quick and cost-free procedure that the Code originally contemplated as an IDR.

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