2014 Legislation: AB 1738 - Attorneys in Dispute Resolution

Bill Author: 
Chau
Subject: 
Attorneys at Dispute Resolution Proceedings
Status: 
Signed by Govenor

Update: The Govenor signed the bill on 9/18.

AB 1738 allows both homeowners and associations to involve counsel in dispute resolution proceedings such as Internal Dispute Resolution (IDR) or "meet and confer." ECHO opposed this bill.

What Does AB 1738 Say?

From the Legislative Counsel's Digest:

This bill would... require the resolution or agreement under an association’s procedure for resolving...disputes between an association and a member to be in writing and signed by both parties. The bill would authorize a member and an association to be assisted by an attorney or another person in explaining their positions at their own cost.

The act also establishes an alternative procedure applicable to an association that does not otherwise provide a fair, reasonable, and expeditious dispute resolution procedure...Under these provisions a procedure that, among other things, authorizes either party to request, in writing, the other party to meet and confer, prohibits the association from refusing a request to meet and confer, and requires the parties to meet and confer in good faith in an effort to resolve the dispute, is deemed a fair, reasonable, and expeditious dispute resolution procedure. The act provides that an agreement reached under this procedure binds the parties and is judicially enforceable if specified conditions are satisfied.

This bill would additionally require the alternative procedure to provide either party the right to have an attorney or another person participate when meeting and conferring provided at their own cost.

AB 1738 Is Bad for Owners and Associations

This bill  increases your assessments by adding lawyers to the informal “internal dispute resolution” (IDR) process, and deny members’ rights to have their statements remain private.

AB 1738 Means More Lawyers

The bill allows anyone – member or association – to bring an attorney to the IDR proceeding without warning the other party. You might know IDR as the “meet and confer” process: an informal conversation between one board member and one owner, working to resolve differences before attorneys get involved. This bill will end that informal process.

AB 1738 is Completely Unnecessary

AB 1738 duplicates a process that already exists! If IDR is unsuccessful, associations and owners are already required to participate in Alternative Dispute Resolution (ADR) before proceeding to trial. ADR permits both parties to use attorneys.

Bigger Assessments, More Liability, and No Resolution

Higher monthly assessments. At $300 per hour, each IDR will cost HOAs a minimum of $900 when one considers the lawyer’s time preparing, attending, and any follow up actions.

More liability. Unlike ADR, this bill allows all statements made at IDR to be admissible in court. This means that an off-the-cuff remark can be used by an attorney against the owner or association in future legal action.

No more inexpensive resolution. By default, associations will bring their attorneys to IDR. In order to protect themselves, owners will also bring their attorneys. This increases expenses for both parties, and encourages an adversarial atmosphere.

HOA Law as Amended

Governor Brown signed AB 1738 into law in September, 2014. On January 1st, 2015 the section of the Davis-Stirling Act concerning IDR required procedures (Civil Code Section 5910) will be amended to include clauses that allow  both "The member and association [to] be assisted by an attorney or another person explaining their positions at their own cost."