If deciding between mediation, arbitration, and litigation seems complex, it doesn’t have to be. Most parties will opt for mediation before escalating the resolution to a binding process like litigation. Likewise, many parties can begin in litigation but ultimately reach a resolution in mediation.
Take a look at how the dispute resolution process can unfold in six simple steps.
1. Discuss the dispute
Buyers, sellers, and real estate agents who have a current disagreement or have located an issue that adheres to a contract’s Dispute Resolution Clause should first discuss the issue with the other party.
If the dispute cannot be resolved verbally, the issue should be raised with the neutral party listed in the contract agreement. Once contacted, the neutral representative will attempt to clarify and resolve the dispute. If they cannot, the issue will move along to mediation.
2. Begin mediation
If both parties do not agree to mediation, the case may be accelerated straight to litigation. If both parties do agree to mediation as their dispute resolution process, mediation can begin.
A neutral mediator will be summoned to oversee the mediation process and encourage a productive discussion that can result in a resolution. If the parties cannot come to a mutual decision, or if the resolution does not align with the terms of the contract, the case is often escalated to arbitration.
3. Seek representation
The escalation from mediation to arbitration often means that both parties will seek legal representation. Of course, this step is completely voluntary. Disagreeing parties can also negotiate prior to the arbitration to decide if they will each retain an attorney, and discuss who will serve as the arbitrator.
4. Conduct arbitration hearing
Arbitration begins with a hearing, where both parties will share relevant facts of the case. Because the arbitrator should be a completely neutral third party, this should be their first time learning the full extent of the disagreements that caused the need for the dispute resolution process.
5. Share evidence
Once the initial facts have been shared, each party has the opportunity to present evidence to the arbitrator. Just like in litigation, this part of the resolution process is meant for each party to prove their case through documentation like inspection reports, photographs, and message exchanges.
6. Issue a verdict
After both parties have presented their evidence, it’s time for the arbitrator to make their decision. The arbitrator must issue a formal, written judgment within a reasonable timeframe, which is typically just days after the final hearing. The judgment is binding, meaning it must be upheld.