Most litigators won’t tell you this time-tested statistic: each party has a 50% chance of losing at trial. And juries can be unpredictable. Maybe that’s why less than 1% of real estate cases are ever heard by a judge or jury. The rest settle sometime before trial – typically at mediation. What is more, Section 7(c) of the AAR Purchase Contract requires that the parties submit their disputes to mediation before filing their lawsuits. According to AAR, parties settled 100% of the cases that they submitted to AAR for mediation in 2012. This article discusses how to increase your odds of a successful resolution at mediation.
What is mediation? It is “a non-adversarial process that brings disputing parties together with a neutral, unbiased third party (mediator) who assists the parties in reaching a mutually agreeable settlement of the dispute.”
What is mediation? It is “a non-adversarial process that brings disputing parties together with a neutral, unbiased third party (mediator) who assists the parties in reaching a mutually agreeable settlement of the dispute.” MEDIATION, Blacks Law Dictionary (8th ed. 2009). And unlike litigation, the mediation process is confidential, including your settlement offers, according to Rule 408 of the Rules of Evidence.
Mediation has many other advantages over litigation. First, mediation is a much quicker process – parties can get their case resolved at mediation in less than one month. On the other hand, it typically takes anywhere from six months to two years to obtain resolution through the courts. Second, mediation is much less expensive than litigation, partially because it is much quicker. Third, mediation leads to more amicable results because the parties get to create their own mutually agreeable outcome.
Importantly, if the parties agree to submit their dispute to mediation, they do not forfeit their right to go to court regarding any claims that don’t get resolved at mediation.
Here are three tips on how to increase your odds of successfully resolving real estate disputes at mediation.
- Be prepared. Prior to the scheduled mediation date, be sure that you are well prepared. Depending on the amount in dispute, hire a real estate attorney to help present your case at mediation. Collect and organize all relevant evidence that you would present at trial, including the relevant transaction documents, emails, text messages, etc. Next, obtain the documents that will prove your damages, such as invoices, receipts, appraisals, and bids. Finally, once you have collected all relevant evidence, prepare a written summary of your claims and a summary of your evidence and exchange this information with the opposing party prior to mediation. You generally don’t want to surprise the opposing party the day of mediation with new evidence or new damages calculations. Instead, you want the other side to be fully aware of how strong your case is before the mediation even begins. Further, the claimant should provide the other party with a written settlement demand prior to mediation to help manage expectations at mediation.
- Timing is Key. As mentioned above, the parties don’t forfeit their right to file their claims in court if the case doesn’t settle at mediation. And mediation is confidential. So there really is no downside to participating at mediation, other than your attorney’s fees. And if the case doesn’t settle at mediation on the first try, the parties can always reschedule a follow-up mediation and try again.In my experience, the few cases that don’t settle at mediation don’t settle because the parties simply weren’t ready to be there. The timing wasn’t right. Picking the perfect time to mediate a case requires a balance of two competing interests: on the one hand, the parties want to get to mediation right away to minimize attorney’s fees and to put the dispute behind them. On the other hand, the parties want to be as prepared as possible and collect as much evidence as they can to support their claims and defenses. Unfortunately, it sometimes takes a bit of time to collect the relevant evidence. The goal of course is to be as prepared as possible the day of mediation without spending a fortune to get there.
- Hire the Right Mediator. Just like in any profession, some mediators are better than others, depending on the circumstances. But at a minimum, the mediator should have: (a) legal training; (b) real estate knowledge; and (c) real estate mediation experience. You can find a list of AAR approved mediators here.
Most real estate disputes end up at mediation at some point. The AAR Purchase Contract requires mediation and the courts require that the parties participate in some form of alternative dispute resolution (such as mediation) before the court will set the case for trial. Mediation has important advantages over litigation and an overwhelming majority of cases submitted to mediation get resolved. If the parties follow the above steps, they will increase their chances of resolving their case at mediation and can avoid taking their dispute through a long, expensive trial.
1 See AAR Buyer-Seller Dispute Resolution Program Mediation/Arbitration Information Packet (2014), at http://www.aaronline.com/wpcontent/uploads/2012/11/Buyer-Seller-Dispute-Resolution-Program-packet-2014-10-07.pdf
2 Generally speaking, if the amount in controversy exceeds $5,000, it’s probably wise to hire counsel. If the amount is less than that, it may not make sense to spend thousands of dollars on legal fees.