Most real estate transactions result in a satisfied buyer and seller. But given the high dollar amounts at stake and the emotional attachment to property, transaction disputes are not unheard of.
Alternative dispute resolution methods are gaining popularity to counteract the seemingly instinctive trend of using litigation to resolve even the smallest disputes. If a real estate dispute arises, parties should consider mediation or arbitration before turning to the court system.
A win-win option
Mediation is a non-adversarial process. The parties do not argue their case or give decision making power to a neutral third party. Rather, parties work with a trained mediator who offers guidance. The mediator assists the parties in reaching a mutually agreeable resolution to the dispute. Mediation provides an atmosphere conducive to open dialogue and reconciliation.
Mediation does not end with a clear winner or loser. Instead both parties work together to fashion a win-win solution. Each party may have to concede something to get something else in return. Depending on the transaction, a contract may require mediation prior to an arbitration hearing.
Employing a decision maker
Arbitration bears similarity to litigation in that it is an adversarial process. Parties submit evidence to support their claim to a third party, known as the arbitrator. The arbitrator reviews the case and renders a final decision.
Arbitration generally results in a faster resolution time and costs less than litigation. However, arbitrators are paid hourly so fees accumulate quickly if the dispute drags on. The arbitrator may limit the number of depositions allowed and categories of documents for exchange. Also, binding arbitration means parties must abide by whatever decision the arbitrator makes.
Lawsuits for presumed damages overburden the judicial system, slowing down resolution time and adding unnecessary costs. Resolving disputes without utilizing the court system means less time and money spent on a solution.