What's mediation? An informal, voluntary approach to settling disputes. Who mediates? Professional mediators and attorneys, for the most part. How does it work? A neutral third party is invited to assist the disagreeing parties in identifying issues, developing options for resolving them and finding solutions everyone can accept.
Mediation can be extremely useful and cost-effective, and is particularly appropriate for co-op and condo disputes because residents are likely to have continuing relationships with one another in the elevator, gym, laundry room and other common areas. By providing an opportunity for parties to speak in a controlled environment, such as in the managing agent's office, mediation can lessen the hostility when parties inevitably interact in the future.
Unfortunately, mediation has been underutilized by co-ops and condos for two reasons: Unlike in other states, New York law does not require it, and there are widespread misconceptions about it. While advocating over the past 20 years for alternative dispute resolution, one of this article's authors has repeatedly received objections from shareholders and unit-owners, who believe they are giving up a valuable right to litigate.
That's a myth that needs dispelling. First all, beware that litigation involves charges, countercharges, lawsuits, big legal bills and large amounts of time. In addition to creating bad feelings among the owners, litigation disrupts the building's budget and can quickly become a financial black hole. And don't forget: Once a case is filed in court, it becomes a matter of public record, and this can adversely affect the value of the building's apartments. Bad publicity may scare away prospective purchasers and lenders.
Mediation, on the other hand, is confidential — what is said in mediation cannot be used in any subsequent proceeding — and nonbinding, in that any of the parties can stop the process at any time. If you do reach resolution, a settlement agreement may be written and signed at the table that then would be binding on the participants. A party may, but need not, have an attorney present. Occasionally, a witness or expert may be called. The whole procedure allows the participants to decide for themselves how to resolve the dispute rather than leaving the decision to a judge or arbitrator.
A side benefit is that experts believe you are more likely to be satisfied with both the process and the result when you participate in creating you own agreement. And where litigation is often unable to adequately resolve quality-of-life disputes, mediation enables you to craft creative solutions that a court would be unable to achieve.
Mediation can work for both conflicts between owners and conflicts between an owner and the board. Arguably, disputes between neighbors stand to benefit the most from mediation, because the owners may not have standing to sue one another for violating a house rule, and the kinds of issues that frequently arise between neighbors are not worth enough to spend money on legal fees.
Costs are hard to calculate, but they are certainly lower than the cost of litigation. The New York City Bar Association's Co-op and Condo Mediation Project supplies trained mediators for a $100 non-refundable administrative fee per party. There is an hourly fee for the mediator, ranging from $150 to $400. Participants are always given a choice of mediators. Since mediation is not intended to result in a win for any party, the parties should typically split the costs.
Additionally, the Community Dispute Resolution Centers Program (CDRCP) funds independent nonprofit agencies in every county in New York State in order to provide access for all New Yorkers to affordable or free alternative dispute resolution services, including mediation. (See sidebar for additional resources.)
In a co-op setting, the board (as a landlord) is bound by the warranty of habitability and must ensure the premises are in accord with the uses reasonably intended by the parties. Nancy Kramer, an experienced New York City mediator who has mediated about 25 co-op disputes, has noticed a recent trend of boards paying the entire cost of mediation in order to get quarreling neighbors to participate in mediation.
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