Are You A California Home Buyer, Seller or Agent Looking
for Information About Real Estate Mediation?Contents of this page:
Are You A California Home Buyer, Seller or Agent Looking
for Information About Real Estate Mediation?Real Estate Mediation
Links to Other Useful Information:
Real Estate
Mediation
MEDIATION CLAUSE
If you're buying or selling a home, you'll probably find there's a relatively new clause in your purchase contract. It states that buyers and sellers agree to use mediation if a dispute arises between them. This means that you agree to try to reach a voluntary agreement before filing claims either in court or in arbitration.
Many buyers and sellers (and real estate professionals) have questions about exactly what they're signing with this new mediation clause -- questions like: "Exactly what's the difference between the mediation clause and the arbitration clause?" and "Does this mean we use a mediator before or after we hire a lawyer?"
LEGAL DEFINITION
A new state law (Evidence Code Section 1115) provides a clear legal definition of mediation in civil disputes. It says "Mediation means a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement."
"Neutral person", "facilitate communication" and "mutually acceptable agreement" are all important phrases here. A real estate mediator is a neutral who helps buyers and sellers reach their own voluntary agreement. Since you control the outcome, any resolution coming out of your mediation will be one that you can live with.
A real estate arbitrator, on the other hand, listens to each side, then normally issues a binding decision. In arbitration, one party generally loses. While both arbitration and mediation use a neutral third party, there's an easy way to remember the difference: In mediation, you decide - in arbitration, the arbitrator decides.
WHY USE IT?
Why use mediation if it's not binding? The fact is that most people in real property mediations first write the terms of their own resolution, then choose to make them into a binding agreement. It's consistently reported that eighty to ninety percent of the participants in mediations reach voluntary agreements.
Turning first to mediation, rather than heading straight off to arbitration or court, offers a number of important benefits. For one, it's usually cheaper and faster.
Another more important benefit is that you can feel free to get at the truth without fear that your own words might later be used against you in court. Under the new Chapter 2 of California's Evidence Code, everything you say is completely confidential by law. In mediation, you can go over who really said what to whom in an informal setting. You don't need to worry about exactly how those hastily written counteroffers or disclosures might be interpreted in a strictly legal context. Instead you can craft your own creative solutions that solve the problems simply and directly.
WHEN DOES IT MAKE SENSE?
What sorts of situations are likely to require mediation? In real estate transactions, it is disputes that come up after the sales contract has been executed that require intervention. At that point, neither party can simply walk away from the deal as they might have done before the purchase was completed.
For example, you buy a house and move in. You discover conditions -- a leaking roof or faulty wiring -- that you believe the seller knew about, but did not disclose to you. Or you might buy a property with co-owners, then get into serious fights about how you will renovate or use the property.
In such situations, it's nearly always in your own best interest to sit down in a legally-protected mediation and work out what the best voluntary agreement would be. If this agreement turns out not to be good enough, you still keep all your rights to go on to arbitration or court. In other words, when you know what the bird in the hand is, then you can make an informed decision about whether to go after the two in the bush!
WHAT KIND OF MEDIATOR DO YOU WANT?
If everyone in the dispute can agree, you can jointly choose any mediator you all agree on, regardless of what the contract may say. It's your contract and your dispute. Since choosing the right mediator can save you from a long and costly court battle, you should know that there is a wide variety of mediators and mediation organizations -- conducting very different kinds of mediations.
Some mediators specialize in helping you negotiate directly with the other people involved. Other mediators keep disputants separated and work almost entirely through their attorneys. Some mediators will lean on you very heavily to give in and sign something "right now or else." Others will urge you to take the time to work out a solid agreement that you know you'll be satisfied with later.
The old saying that "an instrument is only as good as the person playing it" applies in mediation as well as in music. The law allows disputants to choose any neutral person they can agree on and requires no licensing or certification for mediators. This means you want to be a very well-informed consumer, because suddenly lots of well-intentioned people are hanging out their shingles and announcing that they're mediators
Approach choosing a mediator the same way you would approach choosing a real estate agent or any other professional. Get recommendations from people you trust. Find a mediator with solid specific experience in mediating real estate disputes. Ask directly how many cases like yours the mediator has handled, and get references. A mediator's full regular membership in the Society of Professionals in Dispute Resolution assures at least three years' experience as a professional neutral and commitment to the Society's Ethical Standards of Professional Conduct. (Because anyone can join as an affiliate, be sure to check for full regular membership.)
MORE INFORMATION?
Where to go for more information? Your real estate agent's office or local board will probably have a pamphlet on mediation. The Society of Professionals in Dispute Resolution (202-783-7277) can provide a list of its members. You can also do some reading on the subject of cooperative negotiations. Fisher and Ury have written an outstanding book on on this called "Getting to Yes", Penguin Books.
If someone you know is heading towards serious buyer/seller trouble, urge them to learn more about the mediation process. Used intelligently, mediation can solve most problems without the anguish and expense of a lengthy court battle.
* * * ABOUT RON KELLY: Ron Kelly has been mediating real property disputes in California for over fifteen years. He is a nationally-recognized mediator, arbitrator, and trainer. He has played a central role in drafting and enacting many of the current California laws protecting the integrity of mediation and arbitration. He trains attorneys and business professionals in conflict resolution through the University of California Berkeley Extension and other organizations. Ron Kelly is available to serve as a neutral, and to speak, train, or consult on the design of dispute resolution contract language and systems. Please call 510-843-6074 or Fax: 510-843-4439 or Email: ronkelly@igc.org
Copyright 1993, 1997, Ron Kelly. All Rights Reserved. The above article may be copied only for your personal noncommercial use. For permission to reprint, adapt, or use for commercial purposes, please call 510-843-6074.
Copyright 1997 Ron Kelly. All rights reserved. Original content and all HTML encoding at this site are registered with the U.S. Register of Copyrights. Unauthorized commercial use is a federal crime. You may use the contents for your own personal noncommercial use. For permission to copy in any form, or to display or use for any commercial purpose, please contact Ron Kelly at 510-843-6074.