Real Estate Article: Arbitration-Solution to a Dispute
11/18/2003
Real Estate Article: Arbitration-Solution to a Dispute
11/18/2003
When a real estate deal cannot be peacefully executed as accordingly, often a dispute arises. When no mediation or negotiation can be agreed upon, then you will have to resort to arbitration or lawsuit.
Choosing either the court of law or the arbitration process will depend on the seller and the buyer. In CA C.A.R. contracts, the seller and the buyer can choose to accept arbitration as the resolution in case a dispute shall arise.
If you have bought a house before you would have known this because your realtor would have explained to you how arbitration works. But it doesn’t mean that you knew exactly how to choose the correct method.
First of all you should understand what arbitration is.
Arbitration is the term used to describe a method of dispute resolution that occurs outside of the court system. The procedure is:
The decisions made by the arbitrator is law binding. As compared to having a mediator, the mediator‘s solution are only suggestive and not binding. But the decisions of the arbitrator are enforceable by law just as the court order does. The difference between a court order and the arbitrator’s decision is that in court you can appeal, but an arbitrator’s decision is final and you cannot appeal.
Therefore, the process of arbitration is cheaper and faster than our court system, but the disadvantage is that you cannot appeal.
However, under special circumstances, the decision of the arbitration can be revoked, for instance, when the arbitrator is involved in accepting bribe, his or
her opinion were proven not neutral, or he or she is not qualified to be an arbitrator.
In C.A. R. Real estate contracts, an arbitrator must be a retired judge or an attorney practicing real estate law for more than 5 years.
Generally, arbitration does not follow the formal procedures of the court. Therefore, the whole process of the arbitration is much shorter than the court. The fee will be significantly less than what you would spend if you hire a lawyer and court fees.
Both parties can hire lawyers to represent them. In C.A. R. contracts, the party at fault has to pay for the fees of the arbitration, attorney, and other related expenses.
Whether to go to court or arbitration is between the two parties of the transaction. If both party signed the contract saying that they agree to arbitration in the beginning, then when problem arises they would have to resolve it through arbitration.
If at least one party decline the use of arbitration in the contract, then when a dispute shall arise, both parties can still agree to use arbitration or to use the court system.
In case when one party of the transaction does not execute the decision of the arbitrator, the other party can go to court to demand the decision to be executed. When this happens, the decision of the arbitrator becomes a court order and judgment and lien can be recorded in case the party at fault does not comply. You have four years according to the law to file to execute the decision of the arbitrator.
When one party wins, the other party will lose. There is absolutely no win-win situation when you resolve to arbitration or lawsuit. The buyer and the seller should always try to talk it out and reach some kind of mutual agreement before they shall seek the route to arbitration.
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