WHY MEDIATION TRUMPS LITIGATION

By March 8, 2019 Articles

“Where there are no oxen, the manger is clean, but an abundant harvest comes through the strength of the ox.” Proverbs 14:4. Put another way, if you don’t do any work, you might have a clean stable, but you won’t have any crops. Applying this principal to business, if you are involved with enough real estate deals in this litigious culture, sooner or later, you are bound to run into a dispute. Common real estate disputes include failure to close, lack of proper disclosure, title issues, and other issues concerning the property’s condition. Resolving disputes through the courts is often costly and inefficient.  

Experience often yields wisdom.  Which is why the Arizona of Association of REALTORS® (AAR) thoughtfully bestowed buyers and sellers with a common-sense solution to resolve disputes arising out of the AAR Purchase Contract. Indeed, the standard form agreement includes a mandatory Alternative Dispute Resolution clause: Section 7(c) requires that the parties submit their disputes to mediation before filing any lawsuit.  And according to AAR, parties have successfully settled most of the cases submitted to AAR for mediation from 2012 – present.

Importantly, if the parties agree to submit their dispute to mediation, they do not necessarily forfeit their right to go to court regarding any claims that don’t get resolved at mediation.

Mediation has many advantages over litigation or arbitration. The legal dictionary defines mediation as “a non-adversarial process that brings disputing parties together with a neutral, unbiased third party (mediator) who assists the parties in reaching a mutually agreeable settlement of the dispute.”  Blacks Law Dictionary (8th ed. 2009).

Mediation is generally private and confidential. Litigation, on the other hand, is public and even subject to media coverage. Further, any communications involving mediation, including settlement offers, are confidential pursuant to Rule 408, Federal Rules of Evidence.

Mediation has other advantages over other dispute resolution options.  For instance, mediation is often a more efficient process – parties frequently can resolve their dispute through mediation in 30 – 60 days.  Conversely, litigation can take anywhere between six months to years to complete.

Further, because mediation is generally quicker than litigation or arbitration, it is cheaper.

Also, with mediation, the parties get to choose their own destiny (negotiate their own result), rather than leave their fate in the hands of a jury or judge.

And finally, mediation is final and non-appealable.  In other words, because the goal of mediation is to reach a binding and enforceable settlement, as long as the mediation is successful, the result should be conclusive.  Conversely, with litigation, and even arbitration to some extent, the losing party can often appeal the decision to a higher tribunal one or more times.

Most real estate disputes end up at mediation at some point.  The AAR Purchase Contract requires mediation and the courts require that the parties participate in some form of alternative dispute resolution (such as mediation) before the court will set the case for trial.  Mediation has important advantages over litigation and an overwhelming majority of cases submitted to mediation get resolved.  Thus, compelling reasons abound to consider mediation before rushing off to court.

For more information on AAR mediation, follow this link here: http://www.aaronline.com/resolve-disputes/mediation/

Mr. Charles serves as a private Mediator and Arbitrator for AAR.  If you or someone you know has questions regarding Mediation or Arbitration, please call today to speak with Mr. Charles.

Christopher J. Charles is the founder and Managing Partner of Provident Law®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS® (the “AAR”).  He is also an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.

Christopher is a licensed real estate instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at chris@providentlawyers.com or at 480-388-3343.