Another issue that can be addressed in the house rules is how disputes within the building should be resolved. All too often, we hear about shareholders taking the co-op or other shareholders to court over issues such as the right to alter an apartment or the co-op's right to access apartments to perform repairs. One way to avoid these unnecessary trips to the courtroom is to incorporate an Alternative Dispute Resolution (ADR) clause into the revised house rules. Under the ADR, the co-op or condo can require that all disputes be handled by either arbitration or mediation, as opposed to litigation.

Arbitration involves having the parties in dispute sit down with a professional arbitrator or group, such as the American Arbitration Association, in order to have their complaints heard. Ideally, the individual or panel chosen by the parties should have a knowledge of the area in dispute so that the hearing can go quickly, with no need to explain to the arbitrators the context in which the dispute has arisen. For example, a case handled by the Association involving the value of an apartment was administered by a three-member panel consisting of a real estate appraiser, a real estate owner and a lawyer. According to Walter Goldsmith, Esq. of Friedman, Krauss & Zlotolow, a member of the Panel of Arbitrators of the American Arbitration Association, a binding arbitration award can be enforced in the same way a judgment by a court of law can be enforced, and the rights to appeal an arbitrator's decision are very limited.

Another al ffb ternative is mediation, which is a non-judicatory process that can be carried out in a shorter period of time than arbitration proceedings. A mediator does not have the power to impose a settlement or achieve a result, but rather assists both parties in reaching a mutually acceptable agreement.

Despite the distinct advantages of arbitration and mediation over costly litigation, many boards are reluctant to give up their power to sue, especially in cases involving themselves, because they feel they may have more leverage during litigation. Boards are understand-ably more willing to require arbitration during a shareholder vs. shareholder dispute.

Some shareholders may argue that by altering the rules in this manner, the board is improperly amending their proprietary lease and/or by-laws. However, unless the lease or by-laws contains a direct statement precluding arbitration or mediation (e.g., the lease refers to a lawsuit being introduced under certain con-ditions), the board does have the power to change the rules to this effect.

Although most buildings we manage have not put an arbitration clause into their house rules, we have encouraged our clients to require that all disputes be brought before the New York region's American Arbitration Association, or settled with the help of a mediator. As of yet, inclusion of an ADR clause in the house rules has not been challenged in the courts and it still remains to be seen how legally binding they can be if challenged by residents who want to take their complaints to court.

Strongly worded and well-thought-out house rules can go a long way toward avoiding in-house disputes, even without an ADR clause. As long as residents know exactly what is expected of them and their visitors, they have a better opportunity to stick to the rules and avoid irritating fellow shareholders. Some time spent today on reviewing and revising your house rules can mean money saved down the line in resolving conflicts.

Mr. Librett is general counsel for American Landmark Management Corporation. American Landmark specializes in the management of co-ops and condos.