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The Advantage of Mediation in Real Estate Contract Disputes

Filed under: Real Estate Law

Imagine that you’ve purchased a home, only to discover that the sellers purposely omitted details about the basement which routinely floods. (Yes, in fact there are basements in California!) Or, you’re surprised to learn that the septic system backs up every few months, and has done so for years. Maybe a neighbor has infringed on your property rights in some manner, or you’re involved in a lease dispute with your landlord.

Luckily, there is an option to avoid court altogether. If both parties agree, they can choose to mediate their disputes rather than go to court. In many contracts, such as the standard California Residential Purchase Agreement, mediation is mandatory – the party refusing to mediate loses its right to recover attorney fees if it fails or refuses to mediate, which is a severe and significant penalty.

Compared to court proceedings, mediation is a relatively informal process for dispute resolution. The two parties work with a neutral third party, the mediator. This person does not have the power to impose any decision upon either party. Rather, their job is to facilitate discussion and negotiation. The goal is to reach a conclusion that satisfies (or equally dissatisfies) both parties, while avoiding the time and expense of taking the case to court.

The negotiation process can be conducted in a face-to-face meeting, or via proxies if desired. Each party has the option to represent themselves, or to obtain the services of an attorney to represent them. Mediation is far less formal than court, without complicated and protracted procedures. Decisions can often be reached quickly if both parties agree. It is also significantly less costly than litigation or even arbitration.

The primary advantage of mediation is that it is a non-adversarial process. In court, each side would argue their case and then leave the final decision up to a third party (the judge). Through mediation, solutions can be as creative as both parties can agree upon. Often in court a decision will go either one way or another, but via mediation a compromise can be struck.

To learn more about mediation, and to decide if this process might be preferable for your circumstances, call our real estate attorneys. We will be happy to assess your situation and help you decide how to proceed satisfactorily, or whether mediation is mandatory under your particular real estate agreement.

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