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Associations look at depth of legal dispute


September 1, 2006

Read Time

3 minutes



Associations occasionally find themselves embroiled in legal disputes. Troubles include terminating contracts with managers or vendors, association/unit owner clashes and operating agreement conflicts with commercial tenants.

Contract disputes frequently pertain to inept service.

Association/owner battles can be about failure to pay assessments.

An operating agreement wrangle with a commercial tenant could arise from the association’s alleged failure to provide certain services under the lease. A legal tiff could begin with another association over a shared common facility such as a clubhouse.

The most common legal dispute that associations get entangled in is with developers.

“They usually involve developer defects or punch-list items, things a developer didn’t do or didn’t do properly,” said Tim Snowden of Evanston-based management company Heil, Heil, Smart & Golee.

In any legal dispute, there are five steps an association would take, according to Howard Dakoff, an attorney with the Chicago law firm of Levenfeld Pearlstein.

  1. Understanding its position. The association must know exactly what it wants to do. Perhaps it wants to fire a contractor.
  2. Evaluate the strength of its position. “You’re not going to sue if you don’t have a chance of winning,” Dakoff said. “And you can’t negotiate if you don’t know how strong your claim is.”
  3. Present its position. The association would officially notify the vendor, developer or the unit owner and the party’s attorney what it is prepared to sue about if a remedy is not achieved.
  4. Negotiate. The association waits for the response of the other party after presenting its position. “It may become like a tennis match, the ball going back and forth a number of times,” Dakoff said.
  5. Dispute resolution. If negotiations don’t produce a satisfactory outcome for the association, it turns to mediation, arbitration or litigation. More on those alternatives later.


Initially, the process of negotiating might be done by the association without legal intervention.

For example, the association is trying to withdraw from a contract. Management writes a letter stating why the association no longer wishes to continue the arrangement. It wants to cancel the contract because of dissatisfaction with it, but it might be amenable to an offer on better terms.

The other party, trying to salvage its position, in return offers more service or a better price. Negotiations go back and forth, but then discussions reach a deadlock.

“This process is very inexpensive because it does not involve lawyers yet,” Snowden said. “But it is usually very difficult to achieve results that way.”

If negotiations break down, as they have in this example, and the association thinks its position is strong enough to continue, it should turn to a pro. Hire an attorney who understands what you want and has had success at it. Be sure to check the lawyer’s background and credentials.

Of course, hiring an attorney immediately makes continuing the process more expensive. Except for personal injury cases, few law firms take cases on a contingency basis. The association probably will not recover its legal fees, although that is generally up to the judge in any case that goes to trial. The assumption is that legal fees will be the responsibility of the association. The attorney should be asked to provide a reasonable estimate of fees.

We’ll continue this next week.

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