Should I Sign An Arbitration Agreement When Selling A House

When looking for the purchase or sale of real estate, many clients ask their real estate agent if they should introduce the arbitration clause. If this provision is initialled by both parties, it obliges the parties to settle most disputes arising from the treaty. BrokersĀ® typically react in two ways: (1) They tell clients that they do not have the legal knowledge to answer this question competently, allowing clients to choose or refuse arbitration without any instruction; or (2) they simply tell customers that arbitration is faster and less expensive than litigation. Unfortunately, depending on the facts, the opposite may be the case. This article will discuss some of the pros and cons of arbitration and highlight a major challenge that is often not addressed. 2. Arbitration – Arbitration is a dispute resolution procedure that is an alternative to litigation in a courtroom before a judge (and possibly a jury). Instead of taking legal action and going to court, the disputing parties use the services of a private arbitrator such as the American Arbitration Association (AAA) or Judicial Arbitration and Mediation and Service (JAMS) or a similar dispute resolution service. Most of the time, the arbitrator will be a retired judge or lawyer, but in many cases, an experienced non-lawyer, such as a real estate agent, can serve as an arbitrator if the parties agree. Instead of a public hearing in a courtroom, arbitration is an informal hearing that takes place in two eyes in a conference room with the arbitrator, the parties and their lawyers.

In many ways, arbitration is considered a “private proceeding,” but there are two main differences: in arbitration, there is no jury trial and there is no right of appeal. the arbitrator`s decision is binding. SHOULD BUYERS AND SELLERS SIGN MEDIATION AND ARBITRATION CLAUSES? Before signing a mediation and/or arbitration clause, home buyers and sellers should fully understand the legal consequences. Many real estate lawyers offer not to waive legal rights when signing a home sale contract. However, if a buyer-seller dispute subsequently arises and cannot be settled without a dispute, the parties may decide at this stage whether they wish to go to binding arbitration and not to legal proceedings. REAL ESTATE AGENTS ARE NOT BOUND BY THESE CLAUSES. Most home purchase contracts offer intermediation and/or arbitration clauses for buyers and sellers, but not for the real estate agent. There are several reasons for this: one of the reasons for this is that the real estate agent is not a party to the sales contract and is not bound by its terms, with the exception of the sales commission, which is usually declared as a separate agreement at the end of the contract. Generally speaking, this process is a cheaper and more efficient way to resolve a dispute between two parties compared to filing an appeal with the court. But there is a hidden trap that many ignore – third parties, such as.B. The real estate agents involved in the transaction are not a contracting party and therefore cannot be compelled to arbitrate. The Court explained that, in order to prove that a standard arbitration agreement is unscrupulous and therefore invalid, the Court must ascert whether the transaction as a whole deviates sufficiently from Community standards of commercial morality for it to be annulled.

While the existence of a standard contract and unequal bargaining power are not unusual, they do not make an arbitration clause contained in the standard form agreement ruthless. The tribunal concluded that the buyers had not demonstrated that they were dominated by the will of the seller and that the arbitration agreement would cause them unreasonable harm. . . .