Mediation - YOUR LAST, BEST FINAL OPPORTUNITY TO AVOID EXPENSIVE LITIGATION

Disputes happen. Real estate transactions are inherently complicated and stressful. Lots of money is at stake, and both the Sellers and Buyers are trying their best to achieve a successful outcome, but the path forward is often challenging. There are forms, inspection reports, and more forms, and the realtors themselves are under pressure to make sure their clients complete all of the necessary steps. Issues about disclosures, appraisals, loan terms, and title are every bit as important as the quality of the schools, the neighborhood, and of course, the condition of the property itself. These are part of every real estate transaction, and there is ample opportunity for misunderstanding and disputes.

Dispute resolution. Almost every real estate purchase contract, whether created by CAR or PRDS, includes a “dispute resolution” provision that requires, in most cases, the parties to resolve disputes by arbitration. However, arbitration can be as expensive and time consuming as going to court. In an attempt to create a last-ditch opportunity to resolve the dispute, the CAR and PRDS contracts provide a process for the parties to work out the dispute on their own terms through a process known as “mediation.” Mediation is voluntary, but one of the incentives is that a party that makes a good faith effort to resolve the dispute through mediation reserves the right to recover attorneys’ fees and costs if the matter ultimately goes to arbitration.

Mediation vs Arbitration. Both of these procedures are part of the “dispute resolution” process, but there’s a big difference. The most important distinction is who makes the decision about the outcome. In an arbitration, the arbitrator issues a decision after hearing the evidence, and that decision, in most cases, is final and binding. In a mediation, the parties themselves are assisted by the mediator to reach a mutually-satisfactory agreement on terms that they both accept. Another big difference is that mediation usually takes place over a 3 - 4 hour session led by the neutral mediator, with the costs divided equally between the parties. An arbitration can take months to schedule, and almost always requires assistance of legal counsel, and may involve expensive discovery.

Mediation is Confidential. Mediation is voluntary, and it is also confidential. The purpose for this is to encourage the parties to engage in frank and good faith discussions leading to a settlement, without the fear that what is disclosed might be used against them in a subsequent legal proceeding should the mediation fail to achieve a satisfactory result. It is not unheard of that the only obstacle to reaching a settlement is a misunderstanding of what the other party is seeking, and by providing the opportunity for a candid discussion guided by an experienced mediator, mediation very often helps the parties find common ground to resolve the dispute and move forward.