 Merry Christmas to all of you out there. I don't know if that's politically correct to say Merry Christmas, but I'm a Christian and I'm going to say Merry Christmas and I mean that from the bottom of my heart. So I'd like to talk about the Grinch who stole Christmas. And here's what I mean by that is that all of us live in associations. For whatever reason we get some owner typically who disagrees with the board, and we end up as an association spending large amounts of time and large amounts of money if we have to hire a lawyer to handle the most simple of disputes. I want to remind everybody that the fundamental concept of a condo associations is self governance. So, you know, we as an association or you as an association are self governed by an elected board of directors and yes there are 514 b statutes that say what some of these you have to do or not do. And certainly at rubbish rules was helps guide you to run a good meeting. But at the end of the day, most governing documents provide a great deal of authority to the board of directors to make decisions so if the board of directors decides to do something that's lawful. And you as an owner don't like that you don't really have much standing, other than to talk to your board and, and try to share your view but what happens more times than not they write the man letters and they follow lawsuit. And I don't think that the board's premiums go up because this boards are insured protected by the director of reliability policy, and you get into this endless discussion with the attorneys who probably paying for their kids education through this, and we get this endless problem. And at least that particular owners stole Christmas because of the fact we're dealing with this. I was reading an article in the mainland quite interestingly enough that kind of leads into this not totally applicable to Hawaii but where a association to mainland follow the bouncing Bob said, Well, we have rules that says you can't put up Christmas decorations until Thanksgiving, and they have to be taken down by the first Saturday after New Year's. Okay, that's a rule they want to control what the aesthetics of the building looks like so an owner and their wisdom said okay well I hire someone to put my Christmas decorations up. I'm going to put them up four days before Thanksgiving. I'm not going to turn the lights on until it's legally. Okay, so I'm resisting them to be turned on Thanksgiving the legal day. I'm putting him up theoretically early because I'm hanging him on the wall. And so what do you think the association probably did, they sent him a demand letter to we're finding you $1,000 a day, if you don't take down your pre hung Christmas lights. Now, to me there's a degree of common sense about this the purpose and fundable purpose of rule is have some control about what the uniformity of the project looks like. And you know people have solar panels up they have other types of host decorations up. And so someone's hung some lights around and aren't turned on I doubt anybody notices them. And then to these things so they sued the owner and the owner hired a lawyer, and there's been no resolution by the courts in this matter yet, but it flunks the common sense test to me that yes we have rules we have to be able to position those rules to enforce them with some kind of common sense, something logical to it so here's what I'd like to tell you about Hawaii. There are several ways you can resolve a dispute with another. The easiest way is to ask for a meeting with the board of directors. You know you can do that in executive session you can do that privately, you can do that and just a meeting outside of a regular board meeting as a committee of the whole. If you don't talk to the board, and discuss this and seem to can find resolution. And you just simply hire a lawyer to write letters you're, you seem to be already getting off on the wrong foot because you put the board in a defensive position. I'm happy to talk to you. And you have to help with a fair to, when you have a concern, not first talk to the board I have another case I'm involved in right now. Those of you may not know I do a lot of expert witness work in the association Mr. And it's a situation where the owner of second position contrary to the board. The board meeting in a couple of years hasn't ever asked the board why they, they believe their position is correct, and it's simply started to write nasty newsletters to the owners and hire the lawyer. I'm not sure where that's productive for the association because, argumentatively, you have those nasty things you have to disclose them when you buy and sell real estate, and probably the terms on the property value I can't prove that but be logical because you have the baggage out there that someone might want to pay less for the property so, but the first little thumb is in dispute resolution is number one. Only your board of directors and number two you have to respect what authority the board has within their government documents because you can have your own logical ways why you think it should be different but the board has authority to do what you're doing you're not going to win this at the end of the day. The board is going to be. The board has the right to be wrong. They made a business judgment of business decision and what they believe the best interest of the association is no conflicts like they hired their brother to do something it's not Rages price but I don't see that too often I'll get in towards the end of the show we see are the common claims made today by owners against boards. So the first thing I just want to say at the outset is based on self governance he's association and boards have authority to find in their government documents state law. And the best way if you have an issue is to talk to the board. And a personal note, my condo where I own in Hawaii. The front doors are all the same and they were a metal door that's kind of got a patina green frame. Well the board at some point in time got the owners they all agreed to make it a brown frame. You have different owners bought new doors with the brown frame and some owners could take their existing frame like me and have a painted brown so still masses you wouldn't know the difference. And so, I frankly like my green door, but you live in a condo you go with the rules of the condo you go with the majority so in January by green doors being painted brown is just part of living in a condo you have to make sacrifices and give rights to make personal decisions when you live in a condo that's just how it is. And it's logical why it's that way. So let's just say you have that owner who doesn't want to listen to anything I just said, and you're going to have a dispute. You know that there are several methods in the current statute for condominiums HRS 514 be that defines the different types of dispute resolution that are available to you. Let's begin with the first one the oldest one on the books. It's not that popular, but it's still available and certain small claims may have some value and simple claims I should say, and that is called facilitative mediation. A lot of people just say mediation you know there's two types of mediation, facilitative and evaluative. We'll come back to that part in a minute. Facilitative mediation has a set of rules just like everything has rules I guess who stays. And basically, the two sides agree to mediate the matter. And then independent persons hired to try to get both sides to come by and come together. Under the rules of facilitative mediation mediator can't take sides. He's not trying to say you're wrong and he's just trying to express to each other mutually both sides point of view and see if you can find some common ground. And you have a law who anyway mediums mediation center in the Pacific. This is different ones in different islands, where you for a nominal fee to nonprofit, I'm going to say $100 a person. Go to the mediation and try to get a resolution voluntarily. And that is if you decide you want to hire a lawyer you got to pay for that on top of it. If the other side hires a lawyer they got to pay for it on top of it. And the fundamental basis to it is you're going to, you're close enough you should be able to find a way to make compromises to agree. This has been around for a long time under condo 514 day. The problem with it in general is that if the two sides are in a transgender position. It's unlikely you're going to be able to get both sides to find a compromise. And number two, you don't get a report that can be used like who's right or wrong. You end with no no agreement. And you go on and you've paid your 50 to 100 bucks ahead in person, and it moved on and it works for some simple things I would I would say that. But for a lot of things, depending on the complexity it doesn't work. I said there's two types of mediation there's facilitator and evaluate the mediation, a value of mediation was introduced in the Hawaii statutes, two or three years ago. I think it was after 187. So my memory is failing. 196 basically said that as an additional option. You can choose a value of the mediation. Now there's a distinct difference between facilitator and a value of the mediation. In the case of a value of the mediation you're picking again a neutral mediator. It's not a stunt through one or two organizations, and it's a retired judge. Under the rules of the value of the mediation mediator can take side it's almost like a settlement conference judge. And he can say you know if I was the judge in this case, I would make you pay all their legal fees. If I was a judge in this case I'd rule against you, you know the best you can do is getting this, but not these other things. These are the most popular forms of mediation today, because the judge who normally they're judges that doesn't have to be. But these people are kind of like a settlement conference, they'll take the gloves off, they'll tell each side exactly what they think of your case, looking for a way to get some form of compromise. Another example may be a deductible insurance time who's responsible. Maybe there's a middle position that makes both sides happy and they can move on and get things done but the big difference we facilitate a value of mediation is that the mediator makes a much stronger position. And what's interesting under the as you may or may not know, condo associations pay into the real estate education trust fund. There's money in there. Last time I look at it's like two and a half million dollars, where the way this works is that the first hour of the mediators time, which is normally let's say less than $400 is paid half half by the two parties. So worse, you're at 175 200 bucks to have this done by diet of mediation, and the balance of mediation is paid to the real estate education trust fund up to a feeling of six thousand I think it is. And then after that the mediator can request additional funds, if he feels that it is something he's close to settling. So, in this case you get a much stronger mediator with a lot more authority to advocate basically the law and the truth and what this is and, and it's probably the most popular method today. There's some statistics on that and, you know, about 75% of the cases resolved through this process, about 25% resolved then no resolution but what was interesting is, of those 25% 100% resulted and no one filing suit. Because no one's pride theoretically say well I don't agree with you I'm not going to admit that I was wrong, but then when you finish the mediation and the judges warned you about all the potential risks. Yeah, you basically drop it that goes away so I think the, in my little brain I say it's much more successful than 75% because it results and I'm sure there must be cases that result litigation, but I just haven't seen them. That's a value to mediation. So that's the first to the mediations, but we're at a point of a break time. And so we're going to take a short one minute break. And we'll be right back to talk about the other methods of resolving disputes among, not only owners and board members, but board members themselves and management companies. So we'll be right back in one minute. So thank you so much for being lenders physical therapist and board certified orthopedic clinical specialists and I am the host of movement matters. A show that is designed to bring you the best physical therapy tips and exercises so that you can have your best body and do all the things that you love. So every other Tuesday at 11am on think tech Hawaii.com where I show you instructional videos from the top of your head to the bottom of your toes to get your body feeling its best. Remember, life is better when you listen to your physical therapist. I'll see you on Tuesday. Hello, welcome back and I'll say happy holidays for everybody else. Those who didn't like Merry Christmas, and we're in this show talking about dispute resolution and just briefly the first part of the show talked about self governance is how condominiums are based. So the first method to deal with the dispute is talk to your board. Next method is facilitative mediation, which is a kumbaya try to get consensus and the other mediation form is a value of mediation, which allows you to have a retired judge or someone more skillful, take a much stronger position. Again under act 196 some of the changes were made after it was adopted was this is not just between an owner and the board. This can be between a board member and another board member, and this can be between the board and a management company, or maybe an owner and management company so they expanded the number of parties that could participate in this program. Number two, when they amended the law, subsequently, they also said we'll pay for this if both sides voluntarily agree to make it binding arbitration so you could very easily to avoid potential non agreement. So let's say let's make this binding arbitration, and then in fact the real estate commission education trust fund still pays for it but you get a firm resolution to the to the dispute. Now what is the another method of dispute resolution which goes back pretty close to the original 514 b being adopted very rarely used and I'll explain why but I've seen it use. The right for board the board to ask for non binding arbitration. Now that seems to be a conflict and saying non binding arbitration because basically under Hawaii law arbitrations are binding. They're not appealable to courts. Once you've gone into non binding arbitration you have an award. It's going to take fraud or failure to disclose a conflict of interest, something fairly egregious to overturn arbitration award. So what is non binding arbitration well it's a it's a process that was developed before we had a value of mediation. And basically you go through the same process you wouldn't arbitration typically both sides hire a lawyer, you present your arguments you examine witnesses you present documents, and the arbitrator will issue an award. Now under Hawaii law you can't force somebody into binding arbitration, they're entitled to a trial will be by judge or by jury depending on the circumstances. And so it's non binding because at the end of the day, either party can say, I'm filing for a trial the Novo, which means that you want to set aside this non binding verdict. You want to start all over again, but the statute poses some risks and doing that. If you do that. And in fact you don't prevail on the next trial for lack of a better word, by at least an improvement of your position by 10%. Then in fact, all those legal fees and costs since the trial of the Novo and excuse me the value since the non binding arbitration award was issued, you'll have to reimburse the other side for those costs. That's how I read it so you have some risk if you get an award from a non binding arbitration, and you say my office testing the waters I don't want to comply with it. And usually this is before judges again retired judges. Then you run the rest that you may be responsible for some of the costs the legal fees to take it to the next level. If you don't position yourself in vans favor over what the track with the arbitration award said so, and that arbitration is as visible as evidence in the in this new trial wherever that may be or whatever. But it could be to say you all agree to go to a new binding arbitration or could be if I will also hire lawyers and your mortgage your house to pay for the lawyers and your lawyers get the great education for their children and meanwhile you suffer because you have to cut your budget and you can't buy a new car and meanwhile you'll hate each other and and then Christmas isn't any fun and the Grinch is still Christmas. My short scenario about that. But the fact is under the under the statute you have a right to a form of non binding arbitration mandatory because I would tell you for boards, especially, you know, if you didn't go to this application and or the non binding arbitration is considered under the statute, a breach of your fiduciary duty. As such, your director of social liability insurance may not cover you for that. So the status legislature wants people to try to resolve these things. They want to try to keep them out of the court system. And I guess they're basing that hope on common sense and people wanting to resolve problems but I'm sure the people out there who don't want to resolve problems. They want to get even for some reason I don't know why. At the end of the day it costs everybody the money and comes from the common pot. And so I'm not sure it makes a lot of sense. You don't do facilitative mediation, you don't do a value to mediation, and you don't do non binding arbitration, which are by far the cheapest and fastest way to attempt to resolve the dispute. Then you can go to litigation follow lawsuit. Recently, where the owner followed a lawsuit on a matter that subsequent halfway into the lawsuit with discovery and deposition filed under the statute saying, I've changed my mind I want nine binding arbitration. So the judge will know you, that that horse has left the barn you know you had that choice before you filed the lawsuit. You can't go backwards and say tip of hand trials and litigation anyway, the judge tries to force you into mediation. So why not start with mediation and hopefully avoid a lot of this cost and expense and consternation. To me I just drink more wine because I like wine. The reality of it is, if you don't find a way to resolve these to the statute opportunities. Solitative mediation, value of mediation, non binding arbitration, or just meeting with the board. I really hope so I then as the file litigation or a lawsuit. And then you may voluntarily agree to put that in binding arbitration but you can't force a party into binding arbitration. They have to both side have to voluntarily agree to it and you know binding arbitration is pretty much like a court. The court sets rules and deadlines and you produce documents and you bring witnesses before the arbitrator and a testify and you file documents and your right reports is probably no cheaper might be a little faster might be a little cheaper than doing it through the trial court system. But most people don't like the non binding arbitration because there's no guarantee you're done. I like the binding arbitration because the issues are quite simple, and it's easy to get a solution much quicker. But then there may be a lot of other complicated issues that the board or the owner don't want to do binding arbitration they want to have a trial judge and or jury rule on this matter so that's kind of where the rubber hits the road on on your choices. Now, let me just tell you about the most common disputes that are filed with the real estate commission as I said, you have this facilitated a value of mediation opportunity, and the real estate commission because of all these firms and agencies that serve us have to get paid they submitted to real estate commission, they keep a statistics on, on these cases and the status resolutions non resolutions and, and those types of things. Well, let me tell you the most common things that I have seen as what are the common issues that we see before the mediation process. Number one is insurance deductibles. Insurance deductibles, as you may know, a long time ago, the law was changed to allow everybody h o six policies and, and the force deductible on the homeowner for the h o six. So in that particular case, they're arguing over who's responsible for the deductible, some other unit may have been damaged but use the one that caused the damage and the statute gives the board the right to make that decision. And then there's issues of when you have an assessment maybe, whether it's a limited commel or commel know who's responsible to pay for it. Very to follow the governing documents. And my notes here, and very to produce documents as a statutes pretty clear that owners are entitled to certain documents but they're not entitled to everything. And I'll be told by the board, we're not going to give you this because I'm required to but those are the basic issues and the common sense test to me says I don't know why we can't resolve those types of issues without filing a lawsuit, but I can tell you having done a lot of this as an expert. I would just encourage all of you to take a deep breath and realize that condominiums are based on self governance and condo boards have rights to make the decision, and you may not like that decision, but you're going to be stuck with it. You know, you can certainly go out and try to fight change the board and I see all those problems to, but at the end of the day, you live in self governance, but if you're not happy. Remember, go to the board, the soul to the mediation, I do it mediation, non binding arbitration, and if necessary fall lawsuit, but I would tell you that's the most expensive slowest way to go with the greatest risk. And they said the great soul Christmas by following a suit against up condo association. And I'm going to say again happy holidays to everybody and thank you for watching condo insider. We hope to see you back next Thursday at three o'clock. We have another interesting topic and condo and Aloha, and again, Merry Christmas.