ADR (Alternate Dispute Resolution)
September 4, 2007
I had a question from a real estate agent this weekend regarding the mediation process. Interestingly, on August 31, Robert J. Bruss, an attorney who writes for Inman Real Estate News, responded to a question regarding the arbitration clause in the C.A.R. Real Estate Purchase Agreement. This must be a timely subject.
What is mediation and how does it differ from arbitration?
Mediation: This is a process in which the parties to a dispute select a third party to listen to them as they present the issue being disputed. This third party can be someone both parties respect or it can be a professional mediator. There is a cost, usually hourly, but it could be a flat fee.
The mediator, selected by both parties and usually paid on a 50/50 basis, listen to the story of each party and then attempts to negotiate a settlement. Most frequently, a mediator looks for a compromise solution. If the parties are willing to settle and move on, the dispute can be resolved in a timely manner and at minimal cost.
On the other hand, if the parties are unwilling to negotiate or to look for a compromise, then arbitration may be a necessary next step. In mediation, solutions are suggested but the mediator has no power to force either party to a settlement. The arbitrator, once he/she has heard the issues of the dispute, will render a decision that will be binding on both parties. This decision is final and binding and may be taken to the local court for confirmation and may be recorded as a court judgment.
Buyers and Sellers who enter into a Purchase Agreement using the C.A.R. contract are required to make a choice about arbitration. If they initial the arbitration clause, they give up the right to settle any dispute that might arise by using a superior court lawsuit. If they do not initial the arbitration clause, should a dispute arise, the parties can then choose whether they wish to use arbitration or file a lawsuit. The buyers and sellers need to understand this clause, but agents cannot advise them as to whether they should initial or not initial.
From my perspective, a competant mediator can resolve most disputes and is always the alternate dispute resolution of choice.
(As a reminder: the C.A.R. arbitration clause does permit the parties to a dispute to file a smalls claims court action. If the amount under dispute is $7,500 or less small claims court is the fastest and least costly way to arrive at a resolution.)
I had a question from a real estate agent this weekend regarding the mediation process. Interestingly, on August 31, Robert J. Bruss, an attorney who writes for Inman Real Estate News, responded to a question regarding the arbitration clause in the C.A.R. Real Estate Purchase Agreement. This must be a timely subject.
What is mediation and how does it differ from arbitration?
Mediation: This is a process in which the parties to a dispute select a third party to listen to them as they present the issue being disputed. This third party can be someone both parties respect or it can be a professional mediator. There is a cost, usually hourly, but it could be a flat fee.
The mediator, selected by both parties and usually paid on a 50/50 basis, listen to the story of each party and then attempts to negotiate a settlement. Most frequently, a mediator looks for a compromise solution. If the parties are willing to settle and move on, the dispute can be resolved in a timely manner and at minimal cost.
On the other hand, if the parties are unwilling to negotiate or to look for a compromise, then arbitration may be a necessary next step. In mediation, solutions are suggested but the mediator has no power to force either party to a settlement. The arbitrator, once he/she has heard the issues of the dispute, will render a decision that will be binding on both parties. This decision is final and binding and may be taken to the local court for confirmation and may be recorded as a court judgment.
Buyers and Sellers who enter into a Purchase Agreement using the C.A.R. contract are required to make a choice about arbitration. If they initial the arbitration clause, they give up the right to settle any dispute that might arise by using a superior court lawsuit. If they do not initial the arbitration clause, should a dispute arise, the parties can then choose whether they wish to use arbitration or file a lawsuit. The buyers and sellers need to understand this clause, but agents cannot advise them as to whether they should initial or not initial.
From my perspective, a competant mediator can resolve most disputes and is always the alternate dispute resolution of choice.
(As a reminder: the C.A.R. arbitration clause does permit the parties to a dispute to file a smalls claims court action. If the amount under dispute is $7,500 or less small claims court is the fastest and least costly way to arrive at a resolution.)
posted by shirley harry at 8:15 AM
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