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Mediation: The Guide to Resolving Real Estate Disputes In day-to-day real estate transactions, as simple as some may seem, disputes do arise. Parties can disagree on issues such as deposits, undisclosed defects, specific performance, and others. These types of problems can lead to delays in your transaction or possibly to future litigation. There are ways, however, to resolve these matters in a swift and low cost manner. Alternative dispute resolution can save time and money. It can help resolve the dispute and put it behind you, while preserving your relationships with those involved in the transaction. The Real Estate Mediation Center handles only real estate disputes, which can involve buyers, sellers, brokers, agents and any other parties who participate in the transaction, such as inspectors, contractors or developers.
Real Estate Mediation Mediation is a process in which a neutral person-the mediator-helps parties reach a settlement to their dispute by opening lines of communication, objectively evaluating the case, identifying parties’ real needs and finding a solution to address those needs. The mediator does not have the authority to make a binding decision, unlike the arbitration process, in which the arbitrator renders a decision that is final and binding.
Who are the Mediators? To better serve those involved in real estate disputes, the Real Estate Mediation Center uses the services of mediators who practice specifically in the real estate field, such as brokers and real estate attorneys. All mediators must have five to ten years of real estate experience prior to being considered for the roster. Some of the qualities the Real Estate Mediation Center requires are:
The Real Estate Mediation Center constantly reviews the quality of its mediators through monthly meetings and training, as well as through evaluations by mediation participants that assist in improving their skills.
Mediation Terms Case Administrators - the Real Estate Mediation Center staff persons who administer the cases. The case administrator is responsible for the general management of the case, including accepting the request for mediation, forwarding it as a neutral third party, contacting the responding party, scheduling and exchanging information among the parties, amd selecting the mediator, as well as all the other details involved in processing the mediation request. Caucuses - meetings in which a mediator talks with the parties individually to discuss the issues. Documentation - including but no limited to transaction file, inspection reports, contractor evaluations and repair estimates. Mediation - a proceeding in which a neutral party assists the parties in reaching their own settlement, but does not have the authority to make binding decisions. Negotiation - a process in which disputants communicate their differences to one another and use this knowledge attempt to resolve them. Participant - is any individual taking part in the mediation. Party - an individual, entity or group taking part in a mediation as a disputant and all the disputant's attorneys, advocates, representatives and consultants. Which includes:
Requesting Party - the party who files the mediation request.
Responding Party - any party who files a response to the mediation request.
How Does Mediation Differ From Other Dispute Resolution Processes? To understand how mediation differs from other dispute resolution processes, it helps to know the characteristics of the three most common processes used today: litigation, arbitration and mediation. Litigation is an adversarial process in which parties submit evidence to a judge or jury and then rely on the judge or jury to make and impose a binding decision on their dispute. Litigation is governed by formal rules and procedures of court and is generally time-consuming and expensive. Because it is adversarial, litigation is in effect to a contest where a winner and a loser are selected. Arbitration is similar to litigation in that is an adversarial process where the parties submit evidence to a neutral third person (the arbitrator) whom then renders a decision on their dispute. However, arbitration usually occurs in private, rather than in a public court, and is not conducted under a court’s formal rules and procedures. In order to submit to arbitration, in most cases the parties must have already signed an arbitration agreement. Mediation differs from litigation and arbitration in many ways. Perhaps the most significant difference is that mediation is a non-adversarial process-that is, the parties do not formally argue their positions and give decisionmaking power to a third party. Instead, the mediator’s role is to help the parties achieve a mutually agreeable resolution of their dispute.
What Are Some of the Advantages of Mediation? Mediation is a flexible dispute resolution system that can be used to resolve virtually any type of dispute. It allows the parties to work together and control the decision making process. Because mediation in non-adversarial, it also allows parties to achieve a “win-win” situation, as opposed to the winner and loser scenarios associated with litigation and arbitration. Another advantage of mediation is that it is a private and confidential process; the discussions that occur and agreements that result from mediation are not part of a public record, as they are in litigation.
When Does Mediation Occur? Mediation can be initiated at different times in a transaction and for different reasons. First, mediation might be necessary when a dispute arises during a real estate transaction that could threaten the closing of the deal, which could affect a pending purchase for the seller, the buyer’s locked loan rate, or other scenarios specific to that transaction. Second, mediation can occur after the transaction for deposit issues, undisclosed defects, commissions, easements, or other such matters. All these issues can be mediated per the Purchase Agreement.
How Does the Mediation Clause in the Purchase Agreement Apply? When the parties execute a Purchase Agreement, they agree to mediate any issues that may arise from the transaction. If a party refuses to submit to mediation, he can be denied attorney’s fees to which he might otherwise be entitled in subsequent litigation or arbitration. The purpose of the mediation clause is to get the parties to the table where, under a mediator’s expert guidance, they can resolve the dispute on their own terms, inexpensively and expeditiously.
Do I Need a Lawyer at Mediation? Although the presence of an attorney is not required, you may bring one if you are unsure how to proceed with mediation or feel more comfortable with representation. This will increase your costs. You have the option of seeking a lawyer’s advice prior to mediation, or using a lawyer’s services to help you prepare to represent yourself. One key to successful mediation is to identify what you need in order to feel comfortable during the process.
Am I Entitled to Use Witnesses? Ordinarily witnesses are not necessary, since parties are not attempting to “prove” a case. Sometimes a witness can be helpful and might be invited to participate at the discretion of the mediator and with the agreement of the other parties. Because all parties must agree to witnesses’ participation, you should contact the case administrator prior to the mediation to obtain such agreements.
What if Mediation Does Not Resolve My Dispute? While statistics show that mediation is highly successful, the parties are free to pursue any other available system of dispute resolution in the event the mediation does not resolve the dispute. Even if this is the case, mediation can still prove valuable by narrowing areas of dispute and allowing the parties to express their grievances, thus allowing future proceedings to be more efficient and focused.
Stages Of Mediation I. Agreement of Parties Parties can initiate mediation if they have agreed to use it under a clause in a real estate contract or other written agreement that calls for mediation, such as the Residential Purchase Agreement. II. Initiation of Mediation Any party to the mediation clause can initiate the process by completing, signing and mailing to the Real Estate Mediation Center a "Request for Mediation" form, which should contain or be accompanied by all the following information that is known and readily available:
III. Solicitation of Response The Real Estate Mediation Center will then solicit from the named parties a "Response to Request for Mediation" form, as well as dates when they are not available and payment of a filing fee. IV. Selection of Mediator Within ten days after receipt of the "Response to Request for Mediation" form, the Real Estate Mediation Center appoints a qualified mediator. No one can serve as a mediator in any dispute if that person has any financial or personal interest in the results of the mediation unless, after full disclosure, the parties have all given written consent. Mediation is a process in which an independent, neutral third party (known as a Mediator) facilitates communication between disputants and assists them in reaching a mutually acceptable resolution of all or part of their dispute. Mediation is a unique process in that the mediator is not the decision maker, the parties are. Although the mediator will not decide the outcome of the case, it is essential that the parties have complete confidence in the mediator's ability to conduct the mediation in a fair, impartial and even-handed manner without favoring any party. The REMC has adopted the following Policy: “A mediator shall not mediate a matter in which he or she cannot do so without impartiality. A mediator shall identify and disclose all potential grounds upon which a mediator's impartiality might reasonably be questioned. Such disclosure should be made at the earliest opportunity, prior to the start of a mediation and in time to allow the parties to select an alternate mediator. Such disclosure should include the identification of any previous selection{s) as a neutral by any party during the prior two years, and any known current or past personal or professional relationship or affiliation with any participant which might reasonably raise a question as to the mediator's impartiality." The purpose of a mediator's disclosure is to acknowledge any relationships that could raise a question as to the mediator's impartiality. When a mediator makes a disclosure, it should not be assumed that the mediator cannot conduct the mediation impartially. Many disclosures are made by mediators to avoid the appearance of bias or partiality-not because any actual bias exists. For each case, the REMC provides the mediator with the case name and the names of all counselor persons appearing without counsel. They are not given the names of additional parties, company representatives or other consultants. They are only required to make disclosures based on the information they are given. However, in order to avoid any delay or cancellation, please assist the mediator by providing the REMC with the names of others who will be attending the mediation. The duty to disclose is a continuing duty and any doubts about disclosure should be resolved in favor of making the disclosure. It will then be up to the parties to decide if they feel the mediator can or cannot be impartial and if they are willing to waive any potential conflict. To facilitate the disclosure process, the REMC has developed the attached Mediator Disclosure form. If you have any questions about these requirements, please contact the REMC at 858-715-8020. If you have any questions about the actual disclosures, please contact the mediator directly. V. Time and Place of Mediation Conference Within ten days after receipt of the "Response to Request for Mediation" form, the Real Estate Mediation Center sets the date, time and place of the mediation conference. The conference date cannot be more than six weeks after the date the "Request for Mediation" form is received, and must allow for at least ten days advance notice, unless the parties request otherwise. The Real Estate Mediation Center notifies all parties who have agreed to participate in the mediation. VI. Preparation for the Mediation Conference To prepare for a mediation, the parties should:
VII. Conduct of Mediation Conferences At the mediation conference, the parties will be expected to produce all information reasonably required for the mediator to understand the issues presented. This information usually includes relevant written materials, as well as a description of any witnesses and what each could testify to. For more complex cases, the mediator may ask the parties for written materials or information in advance of the conference. Parties who wish to submit information before the mediation conference should provide it to the case administrator at least 48 hours prior to the conference. At the mediation conference, the mediator will conduct an orderly settlement negotiation. Parties or their representative must have authority to settle the case at that time. The mediator will be impartial and has no authority to force the parties to agree to a settlement. VIll. Representation by Counsel Although most disputes are successfully mediated without the assistance of counsel, any party can choose to be ccompanied by and represented at the mediation conference by counsel. In the interest of fairness, however, a party who intends to be represented by counsel should notify the Real Estate Mediation Center and the other parties of such intent in its "Request" or "Response" at least five days prior to the conference. IX. Confidentiality In accordance with Evidence Code and Code of Civil Procedure (refer to code sections on pages 17-19 and confidentiality agreement on page 20), no aspect of the mediation shall be subject to discovery nor relied upon or introduced as evidence in any arbitration, or in any judicial or other proceeding, including but not limited to:
No privilege shall be affected by disclosures made in the course of mediation. Disclosure of any records, reports, or other documents received or prepared by the Real Estate Mediation Center cannot be compelled. X. Mediated Settlement The mediator will put the mediated settlement in writing, and all parties who agree to its terms will date and sign it at the mediation conference. If a party requests and all parties agree, the agreement may be drafted or reviewed by private counsel prior to signing. The settlement must be signed within ten days of the conclusion of the mediation conference. XI. Judicial Proceedings and Immunity The Real Estate Mediation Center maintains, for statistical purposes, a record of all mediations conducted as a result the Dispute Resolution System. The records are only available to the San Diego Association of REALTORS®. Neither the Real Estate Mediation Center nor the mediator may be deemed "necessary parties" in any judicial proceedings relating to the mediation. Under Evidence Code section 703.5, the mediator may not testify in any subsequent civil proceeding as to any communication that occurred in the mediation. Neither the Real Estate Mediation Center nor any mediator serving within it is liable to any party for any act, error or omission in connection with the mediation. |
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