DISPUTE RESOLUTION FOR CALIFORNIA REAL ESTATE TRANSACTIONS
REAL ESTATE PRACTICE, TIPS FOR BUYERS, TIPS FOR SELLERS, TIPS FOR SENIORS
August 5th, 2008
The majority of real estate transactions proceed smoothly and any disputes that arise can generally be worked out amicably. However, buyers and sellers occasionally find themselves facing a problem that needs the help of of a neutral third party. Regardless of whether a mediator, arbitrator or judge is needed to resolve the dispute, the experience can be gut-wrenching for all involved.
REALTORS in California typically use the Residential Purchase Agreement (RPA) with an entire section devoted to dispute resolution. The methods available are as follows:
- MEDIATION- This informal method of dispute resolution takes place outside the court system. A mediator assists the parties but is not empowered to impose a decision on the parties but instead facilitates discussions and negotiations with the goal of reaching a mutually agreeable settlement. This non-adversarial approach attempts to strike a “win-win” outcome and usually does not involve lawyers, judges, arbitrators or inflexible laws and procedures. Mediation is a standard provision in the contract. Failure to mediate a dispute when requested by the other party results in the refusing party losing their right to collect attorney fees even if they ultimately prevail in any such action. Mediation applies regardless if the arbitration clause is or is not initialed by the parties.
- ARBITRATION-Also handled outside the court system, in arbitration the buyer and seller submit arguments and evidence to a neutral person, the arbitrator, who then renders a decision or “award” that is binding and not subject to appeal. Disputes are resolved more quickly than litigation but the parties give up many rights such as formal rules of evidence and procedure used in court trials. Costs are usually less than litigation but can be expensive in complicated disputes. Costs are usually split between the parties for filing fees and the cost of the arbitrator. Both buyer and seller must initial the Arbitration Clause in Paragraph 17B of the RPA in order for the parties to bound to use this method of dispute resolution.
- SMALL CLAIMS COURT-Any matter that falls within the jurisdiction of a small claims court is exempt from mediation or arbitration. In California, small claims court can award individuals dollar damages up to $7,500 or $5,000 for corporations. Many disputes are resolved in small claims court in as little as 30-45 days after filing paperwork. Since attorneys are not allowed unless the verdict is appealed, this method is the cheapest and quickest way to settle a dispute.
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LITIGATION-The last resort method for resolving a dispute because of the cost and time involved. To see a case through takes many thousands of dollars and months or years to resolve.
Like any important decision affecting your legal rights, you need to think carefully before deciding which dispute resolution process is the right one for you. Each method has pros and cons so you should contact an attorney for guidance if you need assistance evaluating your options. Please contact me for advice on any real estate matter at the following:
BRAD GARBUTT
REALTOR/BROKER
REAL ESTATE PROFESSIONALS GMAC
TWENTY FIVE YEARS LOCAL REAL ESTATE EXPERIENCE
