Dispute Resolution: How Can Mediation Save Your Transaction?

By Ashley D. Stanley
Special Contributor

Does your firm have a dispute resolution policy that could potentially help save your transaction?

It has become increasingly important to establish a dispute resolution policy because disputes between buyers, sellers, and even real estate brokers/salespeople are not covered under Article 17 of the Code of Ethics and Standards of Practice of the National Association of Realtors. Parties and the courts are now utilizing programs that avoid the legal system to resolve disputes in a quick and cost efficient manner.

There are several types of dispute resolution methods you can use, including:

Negotiation

Many real estate brokers practice this method without even realizing it. One example is where a disgruntled buyer on a walk-through inspection finds the seller broke the mailbox when moving out of the home and the real estate broker offers to replace the mailbox to resolve the problem.

Mediation

In mediation, a neutral third party assists the disputants in negotiating a mutually acceptable settlement. Mediators do not make decisions but instead help the parties make their own agreement by clarifying issues, utilizing persuasion, and employing other conflict resolution strategies and techniques. Although there is no guarantee that every dispute will be resolved, surveys show that settlements are reached over 80 percent of the time.

Arbitration

Arbitration is probably the best known method. In arbitration, parties agree to submit existing or future disputes to a neutral third party, the arbitrator, or a panel of arbitrators who decide how the dispute will be resolved.

What are the benefits of a dispute resolution policy?

  • Faster and less expensive than litigation.
  • Discourages litigation of frivolous claims.
  • Parties actively participate in the process.
  • Potential for lowering cost of Errors and Omissions insurance.
  • Provides a service brokers and salespeople can offer to clients and customers.

In addition to the above benefits, in mediation, parties retain their legal rights to arbitrate or litigate if mediation is unsuccessful. And the parties control the outcome. The process itself helps restore goodwill between disputants, and this is where the transaction recovery begins. The true interests of the parties (not just their positions) are discovered and addressed.

Again, how can mediation save your transaction? The process and settlement agreement are flexible, allowing parties to move beyond different views of law or fact to creative durable solutions beyond “win/lose.” Because of the non-adversarial nature of mediation, and the fact that disputants do not give up legal rights in agreeing to mediation, it is unlikely you will have an unhappy client or customer. The goal is to avoid delays that postpone closings by being able to resolve disputes quickly and efficiently, preserve the relationship, and ultimately keep the referrals coming.

Although most real estate transactions are completed without difficulties, occasionally there is a need to resolve a dispute. The solutions through mediation are just as binding and enforceable as arbitration awards. The parties are less likely to go into court to enforce their agreement than in arbitration because the parties have entered into the agreement willingly as opposed to having a third party render an award.

Mediation should always be your go-to solution to save a transaction.


Ashley D. Stanley holds a Master of Arts in Dispute Resolution and Conflict Management from Southern Methodist University and is working towards a Master of Legal Studies from Pepperdine Law. She is also a commercial real estate broker in Texas and a credentialed mediator by the Texas Mediator Credentialing Association (TMCA) who is well-known for handling all types of civil disputes, but specializes in real property matters. Her passion is to help the parties resolve their differences and begin to mend community relationships. Book Mediation here.