Arbitrate or Litigate

30 Mar

 When it comes to buying or selling your home, you have the option of signing an Arbitration Agreement.  By signing an Arbitration Agreement, you give up your right to take a dispute to court and agree to settle all matters through binding arbitration.  Many people are uncertain what they should do; there isn’t a right or wrong answer.  It simply comes down to your personal preferences and your comfort level with each option.  The following are some of the things you may want to consider when faced with this decision.

 

Arbitration is a voluntary process.  All parties—buyer, seller and realtors representing the parties—must have signed the Arbitration Agreement in order for arbitration to be possible.  If anyone involved in the transaction did not sign the Arbitration Agreement, the agreement is not enforceable and a party can instead bring the case in district court.

 

The arbitration process is coordinated through a private dispute resolution system and the matters are generally not of public record.  The proceeding typically takes place in the home of the person who filed the dispute and is normally finished in one day.  Since the process is more streamlined than litigation, it is not uncommon for a party that is being sued to have limited information about the claims being brought against him prior to the arbitration hearing.  As a result, a party may hear testimony or learn about a piece of evidence for the first time at the hearing.

 

In contrast, a case that is litigated in court is public record and the facts of the case are accessible in the public domain.  Despite the litigation process being less streamlined, the litigants have the ability to serve written discovery and conduct depositions.  In addition, the parties are able to bring motions, which allow the court to rule on various aspects of the case prior to trial.  These procedures allow parties to learn about the anticipated testimony and evidence for a case in advance rather than on the day of trial. 

 

In litigation, a judge is assigned and you may have the right to a jury.  For arbitration, an arbitrator is selected by the parties from a list of proposed arbitrators.  Although the parties have some choice in the arbitrator, there is no guarantee the arbitrator will have any legal education or experience.  Consequently, the process and the outcome can vary greatly depending on the arbitrator.  Since an arbitration award is binding a party has a very limited right to appeal an arbitrator’s decision whereas litigation provides a broader range of reasons for which an appeal can be filed.

 

Regardless of whether you choose arbitration or litigation, there are statutes of limitations for bringing claims related to real estate.  If a claim is not brought within the specified period of time, there is a risk the claim will be lost.  Therefore, it is critical to act on your claim as soon as possible. 

 

It is important to take the time to think through your choices and know what the choice could mean long term.  Everybody hopes they will never have a need for arbitration or litigation, but if you do, you want to feel as though you have picked the best way to resolve your dispute. 

 

This blog entry is written by Deb Newel, an Associate at Thomsen & Nybeck, P.A. Deb practices in the litigation area of the firm with primary focus on General Civil Litigation, Real Estate Litigation, Insurance Litigation, Construction Litigation and Townhome and Condominium Law.  For more information on real estate litigation, please visit: http://www.tn-law.com/CM/Custom/TOCLitigation.asp

 

 

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