Identifying Creative Solutions: HOA Mediation Example

Video transcript

Here’s another example of a mediation that we performed at helped a couple of clients resolve an issue that could have had a lot of downside for either one. And again as always, these are cases that both parties have agreed to allow us to discuss publicly. We don’t identify anybody personally but still, the details are helpful to potential clients. also, we’re not giving you legal advice make sure that if you have any type of potential conflict you get good legal advice if it’s needed. 

In this case, it was a property owner in a subdivision, a very kind of informal subdivision, and the HOA in that subdivision. They were having a dispute over what that property owner could build on their property. This was a vacant lot that they owned.

The subdivision was mostly developed. It had been planted out in the 1970s and early 80s, and most of the houses were built in the seventies and eighties. And there were a few lots of still weren’t built and it wasn’t one of these subdivisions where you see where all the houses are the same or it’s the same builder. There’s a gate in the front and the sign said it was just a platted-out neighborhood where people bought lots and build their own homes over time. Some of the houses were built in the nineties and two thousands. So it was a vast variety of different homes. 

This particular property owner wanted to build something a little bit nonstandard. They want to build a smaller house than normal. They wanted to build about a 900-square-foot house more like a tiny house. It was going to be a vacation home. It was going to have an RV lot, an RV pad attached to it where, when they visited with their motor home they could park it there and kind of live back and forth between the two. 

The HOA objected to it saying it didn’t meet the design standards. So the property owner went through the HOA documents the CCNRs as they call them. And they saw that there were some vague references to lot size and home size and other types of requirements that may have invalidated their plans. However, there were a few houses in the subdivision that already had homes that were smaller than what they wanted to build. There was a house in the subdivision that was 810 square feet. There was another house in the subdivision that was actually two parcels owned by the same person. On one lot they built a big 2,500-square-foot house, and then the other house they are in the other lot they built a little granny suite a guest house in ADU. That was about 600 square feet. And the subdivision claim that well that’s a separate residence on the same lot but technically there were two separate lots. And that’s how it was approved with the permitting with the county. 

So there was a dispute about what they wanted, it was going to go to court. There were some court filings started where the property owner had sued The HOA filed the notice of the lawsuit. The HOA was ready to defend it. And as part of that, the court couldn’t require mediation, but the court suggested it. They say if you go to court after doing mediation a lot of times the judge will look at it more favorably because at least you have some good faith effort to try to resolve this. In addition to their credit, the attorney that represented the HOA suggested doing some mediation and both attorneys tried to work it out between themselves but there was some animosity between the parties. So it didn’t really work out.

So we got involved and we heard both parties’ points of view. Look, the guy with the property he and his wife said look we just want to build a nice house it’s going to be a quality design they had a floor plan and elevations and the house was actually very high-end with luxury finishes. It had all Cedar siding, and a barrel tile roof, it was a very very nice house. And the landscaping on the lot the site work was going to be very high-end. It was a quality thing, it wasn’t like an old mobile home they were trying to build. 

The HOA, the basics, the basis of their objection was they don’t want this to be an RV park. They knew that this person had an RV home. It was going to be a motor home pad. And, they were kind of primarily use a motor home for their living. And then when they visited this property they were going to use this other house for additional living space. So their objection was they didn’t want it to be a mobile home park or an RV park. But it really wasn’t. These are you know high-end people there, their motor home was actually worth several hundred thousand dollars and, it was worth more than the house is probably going to cost.

So we heard both sides and we understood that each one had a certain priority objective they were trying to meet. But we also looked at the facts and one of the facts was there were already three residential structures in this HOA that were less than the square footage that they were claiming as required. There was some reference in the CCNRs that you had to build at least 1000 square feet and it has to be a primary residence, but the wording of it was kind of vague. And what we did was we said look we’re not attorneys, but if you go to court and the property owner says look you already set a precedent by allowing these other houses to be sold or to be built less than a thousand square feet, basically you invalidated that prerequisite that requirement. In fact, if you’ve done that you might have invalidated your entire CCNRs. If you’re not policing them if you’re not enforcing them properly, you are invalidating your CCNRs In fact, We suggested to both parties that you get advice from attorneys that if there are other CCNRs that have not been enforced over the years, Is this even a valid HOA anymore? Are they having meetings? Is there a design board? Are they enforcing all of the other covenants within this sub-division? And both attorneys for both parties to their credit suggested that well it’s, the judge would have to decide but there are many cases where if you don’t enforce your rights sometimes it could be invalidated. And the property owner didn’t want to invalidate the HOA. They liked the fact that it was an HOA that have certain design standards and requirements. And, there were a lot of rules about the HOA that were beneficial to the property owner so they didn’t want to invalidate the entire HOA. They just wanted to build the house the way they wanted to. The HOA being dissolved wouldn’t be good for the CCNRs or for the subdivision. So nobody wanted that.

We talked again to the HOA board and we asked them what is your major objection. They said well we don’t want it to be an RV park. We want people to be living in houses, not in trailers. And at some point, some of the board members started to realize it was not an actual trailer. It was a high-end luxury Integra motor home, but still, there was setting a precedent. If you let one person do it then you have a trailer then the next thing you know it’s all downhill from there. 

So the question was well what is in your mind that determining factor if they’re living in the motor home or living in the house they said well the way it’s set up. When you drive by you see this motor home and then the house has behind it And I said well other people have motor homes on their property You know they have a trailer or a camper or an RV and they said yeah, but that’s parked on the side or in the back. It’s in their garage. It’s not really their primary thing. So, what I asked both parties was would it be any problem if the residential structure was the primary visual the primary design element as you view this property if it was flipped around. So you saw the house first and the RV was parked. The motor home was parked on the backside of it and the property owner had a little bit of an objection because the view wouldn’t be as good because the site layout wasn’t opposed to that. Plus you have to drive around the house which means you have to go up a little bit of a hill with this motor home. 

HOA to their credit started to realize that look if we fight this we might lose and it might even cost us more with our HOA So let’s suggest that as an alternative and ask them if they could at least add on another 150 square feet I get over a thousand, put the motor home in the back with that be okay. The property owner really didn’t want to go bigger because the design that they had was exactly what they wanted. They had a floor plan it was already set by the architect. And they want to do this for the plan. But the architect could have it reversed and did a mirror image so it would go the other way and they could park on the other side.

Eventually, the property owner looked at it again they walked the property. They put some stakes out and they realized that if they did it another way there would actually be some advantages. The way the door opened on the motor home would open on the correct side. So it would actually walk right into the house They wouldn’t have to walk around the motor home. They could put an awning over it or a covering over it. And that would actually work but there’s still the sticking point of the square footage.

When we started to see that there was this overhang being built, we asked what if they built a small little utility room? A shed at the end of this overhead, at the end of this covering. That would add maybe a hundred square feet maybe if it was you know 10 by 10, 8 by 12. Get you close to a thousand square feet. Would that be good? And that’s what everybody came up with. 

The property owner agreed to flip their floor plan facing the other way, so when the motor home was on the property, it was completely behind the house. The house itself was still 880 square feet. But there was a 10 by 12 addition that was added on. There was just a utility room it wasn’t even connected to the house and it was good for storage. You know we recommended when you have your motor home, there’s going to be some things that you want to put in storage, and that’s a good storage place for it. In addition to that, they also were able to modify the HOA to formalize that square footage saying that all the property owners agreed that even in the past there was some smaller square footage but going forward, those are grandfathered in there wouldn’t be any more allowed. So that solidified the HOA and it also required that somebody’s primary residence could not be a camper mobile home motor home. It has to be the actual residence. So even if you got a shed on your property you can’t live in your rig and then just have your shed to hold a place. So it was a win-win all around everybody got what they wanted and it also protected that HOA from having a different type of RV owner want to come in and make waves and turn it into an RV park. 

So everybody benefited from it. And you know for a couple of weeks of mediation back and forth I think we spent, you know half an hour with each party three or four times, so a few hours altogether. Everybody worked out and then avoided a court case because once you have a court case now you have a precedent. And it puts it on the record of what the rules are, and that might not have been good for anybody. 

If you have questions about mediation contact us through our website, through email at contact@telemediator.com, or put comments below.

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