Condominiums and Homeowners Associations often participate in mediation either as part of a lawsuit or as an attempt to settle a dispute prior to litigation. Most Board Members have never participated in a mediation and usually have questions about mediation and the mediation process. Here are some basics about what a Community Association should expect when facing an upcoming mediation.
What is Mediation?
The first thing to understand about mediation is just what it is and what it isn’t. Mediation is an alternative dispute resolution process where a neutral third-party (the Mediator) works with the Association and the other party to try to resolve the parties’ differences in a way that both sides can agree to. It is essentially a conversation, where each party shares their side of the dispute, and the Mediator tries to help them reach an agreement. A mediation is not a trial or hearing, and the Mediator is not a judge or jury. Instead, the Mediator facilitates the discussion about the sources of the dispute and the possible resolution. The benefit of mediation is that the parties are in control of the possible resolution so that it is not decided by a judge, jury, or arbitrator. In order to encourage the parties to be open and work together towards a settlement, the mediation is confidential, and nothing said or presented at mediation can be used against a party later or shared with anyone else.
Who Pays for Mediation?
The fees charged by the Mediator are generally split evenly by the parties, and each party is also responsible to pay the cost of their own attorney attending mediation on their behalf. Sometimes the parties will reach an agreement either prior to mediation or as part of a settlement agreement to have one party pay the entire Mediator fee, but most often those fees are shared equally.
Who Attends Mediation for the Association?
There are some exceptions, but Florida law generally requires that mediation be attended by (a) the Association’s representative(s); (b) the Association’s attorney of record, if any; and (c) a representative of the insurance carrier, if the Association has made an insurance claim and is considered an insured party. The Association’s representative(s) is/are required to have full authority to make a final decision about a settlement and to execute a binding settlement agreement at the mediation without the need to go back to the Board for approval. The Board of Directors will, therefore, need to pass a corporate resolution prior to the mediation that grants the person or persons attending the mediation the necessary authority.
How Should I Prepare for Mediation?
The Association’s representative(s) should become familiar with the background of the dispute and ensure that they are familiar with the Association’s position and goals to be achieved at the mediation. The Association should gather documents and photos that will help convey their side of the dispute. It is also advisable that the Association meet with its attorney prior to the mediation to discuss any specific questions about the dispute or possible outcomes.
What Happens at Mediation?
The mediation will usually begin with the parties sitting at table, and each party will take turns presenting their side of the dispute to the Mediator. Usually, the parties’ attorneys will make their initial presentation to the mediator if they are represented by counsel. The Mediator will then discuss the dispute and possible outcomes with the parties and will often separate the parties into separate rooms so that the Mediator can speak with each party individually. If the parties reach an agreement, then there will be a settlement agreement drafted at the mediation that will be signed by the parties and their attorneys. If the parties are not able to reach an agreement, then the parties will continue with their dispute.
What About After the Mediation?
If the parties reached an agreement at mediation, then they are bound by the terms of the settlement agreement. If the parties did not reach an agreement at mediation, they are still free to settle their dispute at a later date. Regardless of whether a settlement is reached or not, the mediation process is confidential, and the parties are not allowed to share what was said or occurred at mediation without the permission of the other side. The exception is that the Association’s members are generally entitled to review a settlement agreement entered into by the Association.