Dispute Resolution System - Mediation
Introduction
Although a majority of real estate transactions close without incident, there is a possibility that a problem or dispute will occur. When a dispute does arise, it is usually successfully resolved through normal channels of communication between the parties. Parties are encouraged to communicate their concerns directly with one another and attempt to resolve differences before initiating mediation. Occasionally, a dispute arises which cannot be resolved through negotiation. In the past, parties took their cases to court. Today, they may take their disputes to mediation.
What is Mediation
Mediation is a process in which disputing parties attempt to resolve their disagreements with the help of an impartial, trained third party—the mediator. The mediator does not offer opinions, pass judgment, or render legally binding decisions. The mediator’s only function is to help parties identify their differences and reach an agreement on how to resolve them.
When disputing parties have reached and agreed on a mutually acceptable solution, they sign a written agreement which outlines the terms of the settlement. Once the agreement is signed, parties are legally bound to abide by its terms. If the parties cannot reach a mutually agreeable settlement, they are free to arbitrate or litigate their dispute as if the mediation never took place.
In addition to being easier, faster, and less expensive than litigation, mediation is non-adversarial. Decisions rendered by an arbitrator or judge usually involve a winning party and a losing party. In mediation, there are no losing parties because the parties have been part of the process and together have agreed on the terms of the settlement.
Access to Service
DRS mediation can be used by any of the parties to a real estate transaction—sellers, buyers, brokers, builders, home inspectors, etc. within one year of the closing date. With the exception of controversies that are subject to a hearing under REALTOR® Professional Standards procedures, almost any type of dispute that arises from the transaction can be mediated under the DRS Rules and Procedures.
Rules and Procedures
How, when and by whom mediation is initiated and conducted is covered under the DRS Rules and Procedures. The Rules and Procedures ensure fairness, uniformity and expediency.
Written Agreement to Mediate
Parties who decide to submit potential disputes to mediation sign either a sales contract that contains a mediation clause or an addendum that is attached to the sales contract. The clause states, in part, that parties agree to submit any dispute or claim that arise from the transaction to mediation under the DRS Rules and Procedures. Once the contract or addendum is signed by the parties, parties must submit their disputes to mediation. Parties who do not pre-commit to mediation when the sales contract is executed may agree to and submit disputes to mediation by signing a written Agreement to Mediate. Parties can sign this agreement either before or after a dispute arises.
Initiating Mediation
Any party can invoke DRS mediation by submitting a written request to the REALTOR® Association of the Sioux Empire, Inc. (RASE). The RASE arranges and schedules the mediation conference. The conference is conducted by an independent firm who specializes in providing mediation services. The conference must be held within 45 days from the date on which RASE receives a party’s request to initiate mediation. Usually the conference is scheduled within 21 days. The typical conference lasts for two to three hours.
Mediators
DRS mediators are experienced, qualified mediators who have agreed to participate in the program.
Role of the Attorney
Parties to the mediation have the right to be accompanied by counsel. Attorneys do not participate in the mediation conference.
Fees
Fees for DRS mediation services are established by the mediation provider and are published in accordance with the DRS Rules and Procedures.
Facts About Mediation
Mediation is FASTER than litigation. A lawsuit can take anywhere from several months to several years to be decided. Normally, mediation takes about thirty days from beginning to end. Mediation is LESS EXPENSIVE than litigation. Because parties typically split fees, no one pays an excessive amount.
Mediation is NON-ADVERSARIAL. Arbitration and litigation focus on disagreements between the parties and result in win-lose decisions imposed by the arbitrator or judge. Mediation, on the other hand, focuses on agreement between the parties and results in a gain-gain settlement reached and agreed on by the parties themselves.
Parties who agree to mediation RETAIN THE RIGHT TO PURSUE OTHER LEGAL REMEDIES. If parties cannot reach a mutually acceptable settlement during the mediation conference, they are free to arbitrate or litigate their dispute as if mediation never took place.
Statistics show that MEDIATION IS SUCCESSFUL 80—90% of the time.
Frequently Asked Questions
Is mediation binding? If the parties reach an agreement during the mediation session, it is legally binding. If one party would fail to perform as agreed to in the mediation agreement, the other party can file the judgment with the clerk of court.
Is mediation bending if no agreement is reached during the mediation session? No. If an agreement is not reached, there is nothing for the parties to be bound to.
Should my REALTOR® attend the mediation session? REALTORS® are typically not present, since they have never lived in the property and therefore won’t be able to add any relevant information regarding the property condition.
Mediation requires 20 days notice, but my property is experiencing ongoing damage. What should I do? When submitting the mediation packet, request RUSH processing due to ongoing damage (such as rain coming through a hole in the roof).
Is it okay to bring my children to the mediation? The presence of children at the mediation session typically results in unproductive distractions, increasing the length of the sessions and decreasing the chances for a successful resolution.
For more information or for a Dispute Resolution System (DRS) - Request to Initiate Mediation packet, contact: Mahrens@rase-inc.org.
RASE Mediation Pamphlet
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