Prelitigation Mediation for Homeowner’s Associations

 

One of the new laws for homeowner associations in North Carolina is a law “encouraging” parties with a dispute with their HOA to try and resolve the dispute before filing a lawsuit. The statute provides for a voluntary prelitigation mediation that is similar to a mediation required in every North Carolina Superior Court case. The only wrinkle I see in the new law is the statute of limitations for filing a claim is tolled until the mediation is concluded. Therefore, you are not penalized with a shortened period of time if mediation fails and you need to file a lawsuit.

The law is curious in that it doesn’t really do anything (other than the statute of limitations extension I just mentioned). The mediation is voluntary and either side can refuse to do it. In addition, prior to the law, there was no prohibition from doing what the statute describes. I have participated in a prelitigation mediation for HOAs and members on a number of occasions. The law specifically excludes a member’s failure to pay an assessment or fine or fee from being covered by the statute, but again nothing would prevent a prelitigaton mediation on that basis. If either side declines mediation under this statute, and the case is filed in Superior Court, it will wind up in a mediation anyway.

The law does require the HOA to notify the members every year that they can initiate mediation under this law and include it on their web site. If the HOA doesn’t have a website, it needs to publish the notice at the same time it gives the required list of the names and addresses of all the officers and board members of the association.

–Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678.