Mediation clause built into the CAR Purchase Agreements
Mediation Clause Built into the CAR Purchase Agreements
Are you aware there is a mediation clause built into the CAR Purchase Agreements that agreed to upon execution of the contract by all parties?
This clause is a commitment to resolve matters before they escalate to arbitration or litigation. In Leamon v. Krajkiewcz, home sellers filed a lawsuit to unwind a contract for the sale of their property, which, they claimed, they had signed under duress from the buyers.The parties used C.A.R.’s Residential Purchase Agreement and agreed to mediate any dispute before resorting to arbitration or court action. This clause has what some refer to as a “hammer clause” wherein the party refusing to mediate will be denied recovery of attorney’s fees. In this case, the buyers’ requests for mediation had not been answered.
Even though the sellers claimed they did not have a valid contract with the buyers, both the trial court and the Court of Appeal denied their request for attorney’s fees of over $27,000, citing their failure to honor the mediation clause in the C.A.R. purchase agreement. The Leamon case demonstrates that disregard of mediation clauses can carry very real financial consequences for a contracting party.
What About Mediation?
It is expensive to be wrong when a client does not understand the mediation clause. However, REALTOR®s, cannot advise the clients on mediation when disputes arise. (Only an attorney can give legal advice.) It is a difficult position when a REALTOR® is held out to be the expert in a transaction, and they are. But as we know, the REALTOR®s coordinate the transaction, advise accordingly and give the tools clients need to make educated decisions. Fortunately, when it comes to disputes and finding the right tool to hand the client, the REAL ESTATE MEDIATION CENTER® has become that resolution instrument for buyers and sellers.
The REAL ESTATE MEDIATION CENTER® is made up of mediators who are practicing brokers and/or broker/real estate attorneys with over 20 years of real estate experience (ranging from commercial to residential), commission disputes, standards and trends. They are capable of facilitating real estate matters in mediation and have an 80% settlement rate. Mediation can be invoked during and after close of escrow. The center is equipped to schedule mediation with pressing issues within days of the request (all parties permitting). The center will handle the request to mediate, contact all parties, schedule and assist in assigning a mediator with the experience needed to resolve any real estate matter.
With the trend to attempt and participate in mediation for disputes, shouldn’t we be pointing our clients in the right direction for resolution? And, that direction should be where the real estate experts are available …. “The Real Estate Mediation Center®”.
If you are interested in receiving a REAL ESTATE MEDIATION Guide Book or would like to discuss the process at the Center you can access our website at www.www.sdar.com/remc or contact REMC at (858) 715-8020.