Association Bound By Arbitration Clause

A State appeals court ruled in October that the mandatory arbitration clauses found in agreements between developers  and  unit owners applies to claims relating to common elements brought by associations.  The case is entitled  Zephyr Lofts Condominium Ass'n, Inc. v. Henderson Lofts.

Many sale agreements between developers and unit owners have these provisions which limit legal resourse to arbitration and precludes the filing of suit in courts.   These are key provisions, which apply even if unit owners do not understand them when they purchase.

This case is important because even though  the association itself never was a "purchaser" of a unit and never signed an agreement binding it to arbitration,  the court bound the association to this arbitration requirement.