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  • Writer's pictureJohn R. Mayhew

Real Estate Mediation: The Key to Conflict Resolution


Congratulations! Your clients offer has been accepted! It's the perfect deal. Everything is moving along smoothly and a few weeks before the closing things begin to unravel.


The appraisal came back $32,000 below the purchase price. The executed purchase agreement included an appraisal gap addendum whereas the buyer would only pay $10,000 above the appraisal valuation. The sellers refused to accept the lower valuation of the home and wanted the full contracted purchase price. Your clients are angry. They want the home and begin threatening legal action.


Unfortunately, in today's society litigation is the first reaction to resolve real estate disputes. Real estate disputes can include, earnest money deposits, home inspections, misrepresentations about condition of the property, plumbing or electrical problems, roof leaks, moving dates, breach of real estate contracts, appliances or fixtures disputes, breach of fiduciary duties, fraud, personal property, property encroachments, costs for unexpected repairs, and the list goes on. There is no limit to the type of disputes that can arise in real estate.


Often the disputing parties' emotions are high, and they want their day in court. The parties seldom have the opportunity to speak informally to each other. All parties feel they have a strong case, and the judge or jury will rule in their favor. The courtroom is very adversarial, and you have a winner and loser. No case, no matter how strong, has a guarantee of success in your favor. You lose all self-determination, and the case is put on record and available to the public. You may also lose any chance of preserving a business and/or personal relationship.


So, what can a Realtor do to help alleviate a lengthy, costly, stressful litigation leading to a courtroom trial decision? Section 16 (b) of the "As Is" Residential Contract for Sale and Purchase states: "Buyer and Seller shall attempt to settle Disputes in an amicable manner through Mediation... The Mediator must be certified or must have experience in the real estate industry." According to the National Association of Realtors (NAR), Mediation is the preferred method of dispute resolution.


Mediation can and should be the first step to resolve a real estate dispute and can be initiated at any time by agreement between the disputing parties on the selection of a Real Estate Mediator. The issues in the dispute are self-determined by the disputing parties and not decided by a judge or jury. Your attendance at the mediation does not imply any admission of guilt or wrongdoing. Mediation is a voluntary, confidential, non-adversarial way for people to come together and discuss their issues and concerns with a neutral and impartial mediator.


The mediator is there to facilitate discussion between the disputing parties and gives them the opportunity to explore opportunities for a mutually agreeable resolution. The mediator is restricted from giving legal advice to all parties involved and representation by an attorney is highly recommended, but not required.


The mediation begins with all parties giving opening statements. This allows each party the opportunity to speak and give their facts and key arguments, so everyone understands the strengths and weakness of the dispute. The parties may never convince the other side that they are wrong, but this understanding will possibly help convince both sides that a compromise is necessary.


After opening statements by all parties, the mediator may separate each side into a private meeting referred to as a caucus. Each caucus has a private discussion about the case and how best to move towards a resolution. Information discussed during caucus may not be disclosed by the mediator to any member of the opposing party without the consent of the disclosing party. There is no restriction on the amount of time the mediator spends with each party during caucus and should not be considered showing favoritism of one party over another.


The mediator will move from one caucus to the other discussing opportunities for a settlement. There will be offers and counteroffers until a possible mutually agreed settlement is achieved. Occasionally an agreement cannot be reached during mediation and the parties may institute action in the courtroom. Just remember the parties in court proceedings will lose all self-determination and leave it up to a judge or jury.


If a resolution is obtained during mediation an agreement is put in writing and signed by all parties. The written agreement becomes a legally binding document and is enforceable by the courts.


Mediation can be a win/win resolution for all parties involved in a real estate dispute. Mediation can expedite the resolution process and save your clients valuable time and money. It is a more cost-effective alternative to litigation. Mediation makes better business sense than a trial!


John R. Mayhew is a Florida Supreme Court Certified Circuit and County Mediator specializing in Real Estate Mediation. He is also a licensed Realtor with over 30 years of experience in the Real Estate Industry. Make an appointment today at MayhewMediations.com.



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