The Expert Podcast

Here's another example of a mediation that we performed that 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, so 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 informal subdivision, and the HOA in that subdivision were having a dispute over what that property owner could build on their property. This was a vacant lot that they owned, and the subdivision was mostly developed. It had been platted out in the 1970s and early 80s. Most of the houses were built in the 70s and 80s, and there were a few lots that still weren't built. It wasn't one of these subdivisions where you see all the houses are the same, the same builder, and there's a gate in the front and a sign. It was just a platted-out neighborhood where people bought lots and built their own homes over time. Some of the houses were built in the 90s and 2000s, so it was a vast variety of different homes.

This particular property owner wanted to build something a little bit non-standard. They wanted 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, and 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 CC&Rs as they call them, and saw that there were some vague references to lot size and home size and other types of requirements that maybe would 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 had two parcels owned by the same person. On one lot, they built a big house, 2500 square feet, and then on the other lot, they built a little granny suite, a guest house, an ADU that was about 600 square feet. The subdivision claimed 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 from the county.

There was a dispute about what they wanted. It was going to go to court. Some court filings were started where the property owner had sued the HOA, filed a notice of lawsuit. The HOA was going to defend it, and as part of that, the court couldn't require mediation, but the court suggested it. They said, 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. The guy with the property, him 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. The house was actually very high-end with luxury finishes, all cedar siding, barrel tile roof. It was a very, very nice house. The landscaping on the lot, the site work, was going to be very high-end. It wasn't like an old mobile home they were trying to build.

The HOA, the basis of their objection was, "Look, we don't want this to be an RV park." They knew that this person had a motor home, and it was going to be a motor home pad, and they were going to primarily use the motor home for their living. When they visited this property, they were going to use the house for additional living space. So, their objection was, they didn't want to be a mobile home park or an RV park. But it really wasn't. These were high-end people. Their motor home was actually worth several hundred thousand dollars, and it was worth more than the house was probably going to cost.

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. One of the facts was that there were already three residential structures in this HOA that were less than the square footage that they were claiming is required. There was some reference in the CC&Rs that you had to build at least 1,000 square feet, and it had to be a primary residence. But the wording of it was kind of vague.

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 1,000 square feet,' basically, you invalidated that prerequisite, that requirement. In fact, if you've done that, you might have invalidated your entire CC&Rs. If you're not policing them, if you're not enforcing them properly, you are invalidating your CC&Rs."

In fact, we suggested to both parties that they get advice from attorneys. If there are other CC&Rs 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 subdivision? Both attorneys, for both parties, to their credit, suggested that, well, the judge would have to decide. But there are many cases where if you don't enforce your rights, sometimes it could be invalidated.

The property owner didn't want to invalidate the HOA. They liked the fact that there was an HOA. They had 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 CC&Rs either, 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 to be an RV park. We want people to be living in houses, not in trailers." At some point, some of the board members started to realize it was not an actual trailer; it was a high-end luxury Integra motorhome. But still, they were setting a precedent. If you let one person do it, then you have a trailer, and the next thing you know, it's all downhill from there.

So, the question was, "What is the determining factor in your mind? 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 the house is behind it." I said, "Well, other people have motor homes on their property. You know, they have a trailer or a camper or an RV." They said, "Yeah, but that's parked on the side or parked in the back. It's in their garage. It's not really their primary thing."

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 viewed 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 back side of it?" 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.

The 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, get it over 1,000, and put the motor home in the back. Would that be okay?"

The property owner really didn't want to go bigger because the design they had was exactly what they wanted. They had a floor plan. It was already set from the architect, and they wanted to do this floor plan. But the architect could have reversed it, 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, put some stakes out, and they realized that if they did it another way, there would actually be some advantages. The way that the door opened on the motor home, it 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 a sticking point in the square footage. So 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 overhang, at the end of this covering? That would add maybe 100 square feet, maybe if it was, you know, 10 by 10, 8 by 12, to get you close to 1,000 square feet. Would that be good?"

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 property, it was completely behind the house. The house itself was still 880 square feet, but there was another 120 square feet added—a 10 by 12 addition that was just a utility room. It wasn't even connected to the house, and it was good for storage. We recommended, "Look, 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 were also able to modify the HOA to formalize that square footage, saying that all the property owners agreed that even in the past, there were some smaller square footage homes, but going forward, those were 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, or motor home. It had to be the actual residence. So, even if you have a shed on your property, you can't live in your rig and then just have your shed to hold a place.

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. For a couple 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 it 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 a mediation, contact us through our website or put comments below.