| Until as recently as January, 2002,
mediation was a little-known option for resolving real
estate disputes. When interviewed for this article to
learn of her knowledge of mediation in her field, a
local real estate agent related that if a dispute between
an agent and client could not be resolved, her supervisor
would try to assist. Failing that, recourse was to the
errors and omissions board for which most real estate
companies pay hefty insurance premiums. She was unaware
that mediation was even an option, and she is not alone
in her thinking.
Mediation trainer, Ann E. Swisher,
Director of the Board Support Services of the Ohio Association
of Realtors in Columbus clarifies that within the trade
association, options for dispute resolution included
both arbitration and mediation but not all local boards
offered mediation as an alternative. In the past, any
dispute before the board automatically went to arbitration—a
process in which two disputing parties present their
sides, and a panel of arbitrators decides which side
has greater merit and wins.
When mediation became more widespread, the board would
first determine if a dispute was arbitrable, then mediation
was disclosed as an option to arbitration. Now, each
local board of Realtors has discretion to adopt one
of three options as to when mediation is offered as
an alternative to an arbitration hearing. Option 1)
Continue the policy of offering mediation after review
by the board. Option 2) Require the complaining party
(requester) to file a formal request for arbitration
and offer mediation as an option before the request
is reviewed as to its arbitrability. Option 3) Make
mediation services available to the disputants without
a formal Request for Arbitration being filed. Many realtors,
professionals in the field, and buyers are largely unknowledgeable
about these options.
Why mediation?
Cost and timesavings are two factors that make mediation
attractive. Hefty legal fees and protracted court proceedings
can impede a swift and amicable resolution. The late
Supreme Court Chief Justice Warren Burger
writes, “Reliance on the adversarial process (judicial
system) as the principal means of resolving conflicts
is a mistake that must be corrected…For some disputes,
trials will be the only means, but for many claims,
trial by adversarial contest must in time go the way
of the ancient trial by battle and blood.”
A third advantage in using mediation is confidentiality
of all parties involved. Most often, disputants sign
a confidentiality agreement and are guaranteed that
the contents of their session(s) are exempt from disclosure
in any civil proceedings.
Fourth, mediation is voluntary and non-binding. If
a dispute cannot be resolved (though statistically up
to 80% of all mediated cases reach successful completion),
parties still have the option of withdrawing from mediation
and opting for arbitration or litigation.
Lastly, and perhaps most importantly, mediation “brings
people together who ultimately decide an equitable outcome
and are therefore more apt to abide by the terms of
the agreement, because they have forged it themselves”
adds Cleveland mediator and real estate sales agent,
Carol Catalano. “A neutral third
party, the mediator, facilitates the process but leaves
the outcome to the people in dispute.”
Parties involved in mediation
Much mediation involves only two parties in a dispute
plus the mediator. Occasionally, mediators-in-training
may sit in to gain experience and are bound by the same
rules of ethics and confidentiality as the experienced
mediator. In real estate mediation, many more parties
may be present including buyers, sellers, brokers, inspectors,
contractors, title company, and often the attorneys
for the disputants.
Complex cases involving landlords/tenants, neighbor/neighbor,
Homeowners Association/homeowner, contractor/buyer,
broker/broker, broker/client to name some are more effectively
solved through mediation, because both parties are motivated
to have control of the outcome.
The process
In most mediations, whether involving real estate, marital
dissolution, business conflict, construction, or any
other type, certain elements are followed to assure
maximal effectiveness.
- Credibility and experience of the mediator(s) shared/
introductions
- Process of mediation explained to parties
- Confidentiality agreements explained and usually
signed
- Mediator sets ground rules/ confirms willingness
of parties to participate
- Each party presents his/her side of the conflict
- Mediator may seek clarification and keeps parties
on track
- Parties offer alternatives; mediator also may have
other alternatives to bring
to the table
- Following brainstorming, needs’ assessment
of alternatives begins negotiation
process
- Each issue explored, agreed upon so both parties
experience win-win
- Terms of settlement discussed
- Mediator draws up written agreement, listing all
items and resolutions
- If draft is without any last minute change of mind
or additional input, both
parties sign document and receive copy. Mediation
is terminated.
Average time/cost involved
Far different from protracted legal battles in the courts,
mediation on average lasts a minimum of four hours,
though in some cases may take an entire eight-hour day.
Some real estate mediations are handled by trained volunteer
mediators with costs ranging from $25-$100 per mediator.
Commercial mediators can charge up to $500 per hour,
though most nationally average in the $150-200 range.
If the presence of attorneys is requested by both parties
to sit in on the mediation, each party is also paying
attorney fees separate from the mediator fee.
Conclusion
In addition to listing savings of time and money, avoidance
of exposure of one’s problems in court or the
media, and willingness of the disputants to work toward
a win-win solution, another important factor weighs
in: effective, respectful communication. As
John F. Kennedy mused, “Our task now
is not to fix the blame for the past, but to fix the
course for the future.” The advantages of mediation
over arbitration and litigation are numerous and should
be promoted in future real estate conflicts. More education
is necessary to inform agents and related professionals
in the field of this option.
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