Mediation and arbitration are tools often used to help resolve almost any kind of legal dispute or disagreement. This is often the first option for many people in a legal dispute because it usually will be solved more quickly and with less expense than taking a case to trial.
When would it be best to use arbitration or mediation for your real estate dispute?
Using arbitration or mediation is most beneficial for concerns that may be considered minor but essential in regards to your real estate deal. It can be effectively used to handle:
- Disputes about earnest money.
- Misrepresentation about the condition the property was in, its fixtures, or major appliances.
- Issues related to the cost of repairs or inspection.
Why may it be more beneficial?
You will be able to get through arbitration and mediation within a few months after the dispute arises, whereas court cases can often take years to be finalized. During mediation, the resolution will usually happen in one meeting that will likely last a few hours. If choosing arbitration, you can expect the resolution to take a little longer as the panel will have to weigh all of the stated facts, to render a decision. The costs are also significantly less with an hourly or daily rate being charged by the mediator and arbitrators, which will be split between the two parties.
Is arbitration considered legally binding?
Arbitration can be either binding or non-binding, and this point will need to be established before the arbitration begins. If you choose to make the decision binding from the beginning, once it is handed down, both parties will be required to adhere to it.
Not necessarily a win-win, but better than losing too much
There are many common disputes that real estate transactions can lead to. This can often be related to the emotion that goes into real estate deals as well as the amount of money involved in the transaction, often representing people's hard-earned savings. Most likely, your real estate contract may require mediation and arbitration before allowing you to proceed with other types of action. Many real estate cases are simple enough that a resolution can be agreed upon through mediation or arbitration, saving both parties a lot of extra time and hassle.
Two horses of a different color
Mediation is considered a non-adversarial process. Unlike typical court settings, parties do not argue their case and leave the decision up to a third party. A mediator will work with both parties to help find a resolution that is mutually agreeable. In arbitration, each party will submit their evidence in front of the arbitrator, an independent third party. Even though it is more similar to a court setting than arbitration, it is in private surrounding, with much less formal rules and procedures as a court.
Preparing for a successful real estate mediation
Being prepared is the best way to ensure that your mediation will go as smoothly as possible. You should:
- Prepare for your case - Go in with an understanding of what you want the mediation to achieve, what claims you are making, and all of the evidence to back up those claims.
- Consider the alternatives - Mentally note what your options will be if the mediation fails and whether or not they are feasible options for you. This may help you get into a better mindset to be open to negotiation.
- Understand what your opponent wants - Acknowledging what your opponent wants to achieve can give you a better start at a successful negotiation.
Be smart, get legal counsel
It is always beneficial to have your legal counsel present, even if you are only going through mediation. It is good for your attorney to know what is going on with the case in the event it proceeds to litigation. They also can prepare you for your arbitration and mediation so that you may have a more successful outcome.