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Mediation Is One Way to Avoid Litigation

Paula Chin in Legal/Financial on February 15, 2019

New York City

Mediation II

Mediators can turn potential lawsuits into amicable handshakes.

Feb. 15, 2019

Here are answers to some basic questions about resolving co-op and condo disputes through mediation.

What is mediation? It’s an informal, voluntary approach to settling disputes in which a neutral third party – usually a professional mediator or an attorney – assists the disagreeing parties in resolving conflicts. Mediation can alleviate friction between neighbors, between a shareholder and the co-op board, and, in newly constructed condo buildings, between unit-owners and the developer.

How much does it cost? The hourly rate for mediators ranges from $150 to $400. The New York City Bar Association (NYCBA) will provide two panel members, along with their résumés, to select from. Other agencies, such as the American Arbitration Association and JAMS New York Resolution Center, also provide mediators, but their rates can be higher. Mediator fees are generally split by both parties, but there has been a recent trend of boards paying the entire cost in order to induce feuding neighbors to come to the table.

What are the advantages? Mediation is particularly appropriate for co-op and condo disputes because residents are likely to have continuing relationships with one another. When two neighbors can’t stand to see each other in the lobby or the elevator, it poisons the atmosphere of the whole building. Trained to handle tinder box situations, a mediator can help parties come up with more creative solutions than those provided by a court. “Talking conversationally instead of in legalese, asking open-ended questions, summarizing and reflecting people’s views – they’re all part of our tool kit,” says Diane Rosen, a real estate attorney with Ortoli Rosenstadt who is also on the NYCBA panel. “In mediation-speak, we talk about ‘positions,’ which is the position a person is taking and the outcome they want, and ‘interests,’ which is what they want or need, like a desire for fairness and respect. A good mediator calibrates the parties’ expectations, which a lawsuit can’t do, so we can meet their needs and satisfy their interests.”

Because the process is strictly confidential, it’s also valuable when resolving disputes with developers in new buildings. Once a case is filed in court, it becomes a matter of public record, which can adversely affect the value of the building’s apartments and scare away prospective purchasers and lenders. For that reason, most developers prefer to settle without going to court.

What are the limitations? Attorney Mark Hankin, a partner at Hankin & Mazel, will not mediate disputes that involve more than two parties. “I tell all my board clients they’re fine for a one-on-one situation where no one else is involved,” he says. “But if there are three units complaining about the noise or odor from one apartment, I will pursue a lawsuit because that person is interfering in the rights of other shareholders, which the proprietary lease says you can’t do.”

Ideally, dispute resolutions should result in a signed agreement that becomes a binding contract. The absence of such a document can cause problems to fester. “That happens about half the time,” Hankin says, “and often the parties are feuding again after six months.” In that case, a board can try to mediate again, or the complaining party has the choice to try to enforce the agreement in court.

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