Alternative Dispute Resolution and Residential Purchase Agreements

Most real estate transactions in California utilize the California Association of Realtors Purchase Agreement and Joint Escrow Instructions (commonly referred to as the “CAR Form”). This pre-printed contract form includes specific references and requirements that the Buyer and Seller participate in mediation and, often times, arbitration of any dispute.

Mediation of real estate disputes, like all mediations, involves a neutral third party guiding parties to a mutually agreeable resolution. Parties often share the costs of the mediator equally and the proceedings can be held in any convenient location. The mediation proceedings are confidential and, should mediation not resolve the dispute, any offer or other statement made at mediation is inadmissible in further legal proceedings.

If parties fail to resolve their claims by informal negotiation or mediation, Buyers and Sellers can turn to Small Claims Court to resolve their claim. California Small Claims Courts limit recovery to $10,000 in disputes between individuals. Disputes involving corporations are subject to lower recovery limits.

Finally, real estate disputes can also be resolved by arbitration. If agreed upon in the Purchase Agreement, buyers and sellers may give up their right to formal legal proceedings in favor of binding arbitration. Arbitration involves an individual or panel of arbitrators who make a final ruling on the dispute. Arbitration awards can be converted into formal court judgments allowing for formal enforcement and collection of an arbitrator award.

Amir H. Afsar, Esq. has been practicing law since 2004 and founded his firm, Afsar Law Group, A.P.C., in 2008. Mr. Afsar and his law firm represent clients and also mediate/arbitrate matters involving business, real estate, construction, and automotive legal claims throughout California. Mr. Afsar can be reached at Afsar Law Group, A.P.C. at 760.345.3110, Ext. 22, or via email.

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