Advantages of Mediation & Arbitration in Resolving Real Estate Disputes

Real estate is a volatile business.  Nothing in it is fixed in any true sense: Property values rise and fall, interest rates rise and fall, neighborhoods shift and evolve, and ideal home sizes and configurations change.  In such a changeable environment, disputes can simply be more chaos on top of existing chaos – especially when they involve litigation.  When everything is moving so fast, litigation is almost always a deal-breaker.  A better solution is the flexible and efficient route of Real Estate Mediation & Arbitration.

Advantages of Real Estate Mediation & Arbitration

Consider the advantages of Real Estate Mediation & Arbitration over litigation:

  • Same results, less time and money.
  • More control, and you can even have an attorney present.
  • Preserve business relationships with less adversarial approach.
  • Private, not a matter of public record.

Made for Each Other

Real Estate and Alternative Dispute Resolution (ADR) are a perfect fit, because using Real Estate Mediation & Arbitration to solve problems brings investors, sellers, landlords, tenants, developers and lenders together as a team to solve problems, instead of dividing them up into factions to fight.  Real Estate is always a communal activity involving neighbors and local businesses, and disputes should be treated accordingly, as transient disagreements among friends, as long as there are no charges of criminal behavior.

Litigation often feels like progress because of its fearsome reputation.  But in Real Estate, Mediation & Arbitration is almost always more the effective strategy.

Mediation and Arbitration: Both ADR, but Not the Same

Mediation and ArbitrationThe lines between mediation and arbitration continue to blur.  Though the practices are both forms of resolving disputes through alternative methods to litigation, they are fundamentally different.  Determining which form of ADR is right for your situation requires an understanding of the differences between the two practices.

Arbitration provides a simpler, quicker method for solving a dispute that would otherwise be settled through litigation.  A neutral third party, called the arbitrator, hears arguments from each side of the dispute and levies a ruling.  The ruling is in favor of one party or the other.  Some arbitration is binding, while others have the option of continuing on to litigation if the outcome is not satisfactory to one or both parties.

Mediation, too, is simpler and quicker than litigation, but that is where the similarities end.  Mediation allows the disputing parties to create their own resolution.  A neutral third party participates, but has no say in the final outcome, other than to help the parties determine if that outcome is legal.  Mediators facilitate discussion between the disputing parties and encourage them to find common ground.  Mediation is only successful if both sides of a dispute are satisfied with the outcome and is not binding until this occurs.

 

There are three main fundamental differences between mediation and arbitration. 

Arbitration is adversarial, which means the goal of each party is to win and cause their opponent to lose.  Mediation, on the other hand, is non-adversarial.  The goal is not to win, but to reach a resolution that satisfies everyone.

The role of the neutral third-party is also different.  In arbitration, the third-party is responsible for levying the final outcome and the parties may or may not be required to accept that outcome as legally binding.  In mediation, the third party is not in control of the final outcome, but instead guides disputing party through the process of resolving the issue at hand.

Finally, the skills and expertise of the neutral third party vary between arbitration and mediation.  In arbitration, it is important for the third party to have expertise in the issue at hand.  For instance, if the dispute relates to a business contract, the arbitrator should be an expert in contract law.  On the other hand, in mediation, it is most important the third party be an expert in communication and be able to offer creative approaches to resolving conflict.  Knowledge about the subject matter is helpful, but not necessary.

The Top Qualities of a Good Mediator that You Should Look For

Top 10 Good MediatorIf you have recognized the potential to resolve your legal dispute outside of the courtroom, your next step is probably considering a mediator.  This is a really important decision, since a trained and experienced mediator is much more likely to draw you case to a conclusion in an efficient manner.  When you hire the right person, you can reap all the benefits of mediation without facing all of the downsides of litigation.

A mediator must first have excellent communication skills.  Especially in stalemate disputes, a mediator has to be able to get the parties talking.  When communication is not the focus, mediation is more likely to fail.  That’s why a good mediator will know how to guide the conversation and how to get it back on track when that is what’s needed.

A good mediator will have experience in alternative dispute resolution.  A great mediator will have some familiarity with the industry or nuts and bolts of the dispute in addition to mediation experience.  If you can find a professional, for example, who has helped numerous couples work through a divorce, that’s a good sign that you might experience success with him or her, too.Past experience is a great indicator of success rate, comfort with the topic at hand, and communication skills.  The mediator should also treat both parties with respect and should remain neutral throughout the length of the process.  This is one of the benefits of mediation that many disputing parties appreciate.

The next quality that a great mediator will possess is patience.  Hitting roadblocks is a big issue when it comes to parties embroiled in a legal dispute.  The mediator can be proceeding fine until one party makes a statement that the other doesn’t like, initiating an argument.  Putting those communication skills and patience to work, a mediator is going to be able to help people work through these challenges more effectively.  Flexibility, too, goes alongside patience.  A mediator should be able to see when a particular tactic isn’t working or when two parties are gridlocked on a certain issue.  Being open to trying new ideas and helping that transition go smoothly is important for everyone involved in the mediation session.

Choosing a mediator is crucial – it can help to bring about a better, faster solution to your dispute and provide an alternative forum for working through the issues.  Make sure you vet the professional you’re hiring for your mediation needs.

Mediation and Arbitration: What They Mean in a Real Estate Purchase Contract

Real-Estate-Purchase-ContractWhen buying and selling property, most people assume that once you sign a contract to buy or sell, it’s more or less a done deal.  Unfortunately as too many people already know, many real estate deals that seemed perfectly rock-solid can go sour, often unexpectedly and often causing real harm to one of the parties.

What most people also do not know is that when they sign that contract in California they are almost certainly agreeing to a mediation clause – but not necessarily an arbitration clause.  This is because standard real estate contracts (which make up about 90% of all contracts used) in California include a mediation clause, and it is not required that the contracting parties initial it – it’s in effect automatically.  However, if the parties wish to have a binding arbitration clause, such a clause must be explicitly initialled by each party or it is not considered to be in effect.

The difference between these clauses is important.  Mediation is a process that seeks to resolve a dispute between two parties.  The results can be binding or non-binding depending on the agreement of both parties involved.  A mediator doesn’t take sides and is unconcerned, by definition, with ‘fairness’ or ‘justice.’  The role of the mediator is simply to resolve a dispute so that it does not proceed any further.  The reason you do not have to explicitly agree to a mediation clause is because it may or may not be binding.  If you refuse to go through the mediation, however, you may be prevented from recovering legal costs even if you win your case in litigation.  This is why it’s often advisable to go through the mediation process even if you are certain it will not provide the relief you require.

Arbitration is a binding process, and as a result explicit agreement from both parties is required.  An arbitrator’s decision cannot be appealed – it is final.  The process is generally much faster than legal actions – most lawsuits take anywhere from 3-5 years to reach a resolution – and much less expensive, but an arbitration conference room is not a court house and you do not have the same legal protections and options as you would in a law suit.  The pros and cons of this type of alternative dispute resolution are obvious and must be weighed before entering into any arbitration clause.  Don’t forget you can always pursue arbitration (with the agreement of the other parties) at a later time.

If you have questions about mediation or arbitration as it applies to real estate transactions, seek out an arbitrator who is familiar in that particular state’s real estate landscape before proceeding.

Top Ten Consumer Rights in California Home Purchase

Consumer Rights in California

If you are purchasing (or planning to purchase) a home in California, it is important to know your rights as a consumer before you start your search. Many unscrupulous sellers and brokers rely on the fact that home buyers have not done their research and are not aware of their rights in the exchange. Such assumptions can lead them to attempt to take advantage of you as you are searching for a home.

However, if you show them from the onset that you are educated about your rights, you’re much more likely to settle on a fair deal.

  • As a consumer, you have the right to select your own lender, real estate broker/agent and inspector.
  • As a consumer, you have the right to use California’s approved Residential Purchase Agreement (RPA-CA) when participating in the process of making offers or accepting an offer.
  • As a consumer, you should always be given up-front information concerning the real estate agent’s relationship to the seller. This information is usually given through an Agency Disclosure Form and should be available to you at all times.
  • As a consumer, you have the right to hire an attorney or mediator to review all of the documents involved in the sale or potential sale of the property. As California is considered an escrow state, you will also deal with an escrow company, which acts as a neutral third party in ensuring that the contract is upheld properly.
  • As a consumer, once you have signed a RPA-CA contract, you have 17 days to change your mind after your offer has been accepted. While there are certain conditions to this–such as dissatisfaction with the condition of the home or the neighborhood in which it is located–you can back out of the offer and contract without being penalized.
  • During the 17-day timeframe provided to you in the RPA-CA contract, as a consumer, you have the right to negotiate with the seller regarding repairs that you believe should be made or credit that should be applied to the asking price to cover the cost of those repairs (if they are not made by the seller). Even if you purchase a property that is sold to you “as is,” you have this right.
  • As a consumer, you should be given a copy of every piece of documentation signed pertaining to the property’s purchase.
  • As a consumer, you always have the right to walk away from the purchase while it is in escrow, although you could be penalized financially for this decision. It is important to speak with an attorney or mediator if you choose this route to make sure that it is in your best interest to do so.

Mediation

Mediation

No matter where you live, whether in Oakland or Alameda County, California, or anywhere else in the world, one fact pertains to any legal action that threatens to go into a courtroom: It is always worth attempting mediation first.  Mediation is less costly, less time-consuming and less combative, and often solves disputes long before they clog up the local resources of the court system.  When conducted by an experienced and knowledgeable professional such as John Preston, mediation is not only a better solution than litigation; it is also often mutually satisfactory.

John Preston has been serving individuals and the local business community as a first class mediation professional for decades, tapping his immense experience in legal matters, business both local and international and arbitration.  He’s served as an official arbitrator in over 500 mediation cases, including civil lawsuits, personal injury suits, contract disputes, and real estate disputes.  His mediation skills have helped settle disputes valued in the tens of millions of dollars and he’s also helped individuals in more modest disputes find mutually acceptable solutions without the expense and anxiety of a court proceeding.

John Preston knows the law, he knows how business works, and he knows the people of his community.  He can combine these assets in his role as mediator and sift through the issues, seeing the legal implications clearly and drawing on his experience to offer creative and unique solutions that are much more effective than the brute force typically employed by the courts.

Mediation is always worth a try.  To give it the best possible chance of success, the right choice of mediation professional is crucial.  John Preston is always that right choice, regardless of the specific issues involved; he takes pride in his ability to fairly and creatively bring resolution to the issues before him.

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