13 Apr Does your real estate contract need an arbitration clause?
Are you stumped by the inclusion of an arbitration clause in a real estate contract? The purpose of the arbitration clause is to have the two parties agree to resolve any disputes that may arise by arbitration as opposed to litigation. The arbitration is handled by a third party such as a private arbitrator or through a dispute resolution service.
The arbitration process involves an informal hearing between the arbitrator, the two parties and their lawyers. The arbitrator can hear testimony and review documents submitted. The parties have already agreed to abide by the arbitrator’s decision, no matter how it turns out. The arbitration clause has some advantages, including these:
- Arbitration requires less paperwork than a lawsuit.
- The process may be less expensive than a court case (depending on the arbitrator’s fees).
- You may have more control over scheduling in the arbitration process vs. a court trial.
A few disadvantages to consider:
- There is no jury and the decision is based solely on the arbitrator’s judgment.
- You do not have the same protection of rights as you would in court.
- You have no right to appeal the decision, as you would in court.
If you do opt to have an arbitration clause in your real estate contract, the clause may or may not include the right of discovery, which would allow you to question the opposing party by deposition or with written questions.
There is no right or wrong answer as to whether you should include an arbitration clause; It will depend on your unique circumstances. It may be a matter of preference. Barsh & Cohen is a full service real estate law firm with over 75 years of experience. We will review your case, present you with all the options and advise you on solutions that will be most beneficial to you.