Boards would be wise to facilitate mediation among the residents, and can do so at board meetings and through a website or newsletter. Some mediation advocates even encourage boards to amend their proprietary leases and bylaws to stipulate that any disagreement with the board or another resident must first go through mediation. Amending the proprietary lease and bylaws may be the only way to do this. Such amendments require owner approval, however, and that may be difficult to get.
Clause and Effect
Some scholars, in advocating for mediation, have proposed that boards need only amend their house rules to include a mediation clause. Amending the house rules would be much simpler than amending the proprietary lease or bylaws because boards would not need shareholder or unit-owner approval. However, whether such an amendment would withstand a court challenge is uncertain. (See the sidebar for a sample amendment.)
Whether a mediation clause is inserted into the proprietary lease, house rules, or any other contract, it should address similar issues. Generally, the clause will provide that parties mediate first, before resorting to binding arbitration or litigation. An effective clause could remove boards from the unwanted position of arbiter of disputes, formally empower the landlord or community association's board as the arbiter or mediator, or formally empower a third-party mediator. If outside mediators need to be hired, the clause should spell out how the services will be paid for and how the mediator will be chosen.
Stuart Saft is a partner at Dewey & LeBoeuf and chair of its Global Real Estate Department. Julie Burakoff is an associate at the firm.
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