(Sept. 23, 2022) The National Association of Realtors explains the differences and the pros and cons to both mediation and arbitration, alternative dispute resolution options when a dispute arises from a real estate transaction.
The situation and desired outcome will determine which alternative dispute resolution is right.
As described in the source Arbitration vs Mediation (Pepperdine, 2022), mediation and conflict resolution are options for business disagreements with two parties who still wish to remain friends, partners, and will perhaps work together in the future.
Mediators are neutral third parties, and mediations are often not binding.
Alternative dispute resolution refers to the methods of dispute resolution that do not escalate to court.
Unlike mediation, which often results in an agreement, arbitration usually involves coming to a reward or decision of some sort at the end of resolution. Arbitrators are often lawyers, and the agreements made during arbitration are usually binding.
• Mediation, which is non-binding, involves a mediator assisting both parties with communication, in hopes of coming to a shared agreement.
• Arbitration often involves a binding agreement and occurs when an arbitrator, often a lawyer, applies law and facts to the case resulting in a reward or solution.
Other differences are that mediation is meant to be non-adversarial.
Arbitration and litigation focus on disagreements between the parties and result in win-lose decisions imposed by the arbitrator or judge. Mediation, on the other hand, focuses on agreement between the parties.
Parties who agree to mediate retain the right to pursue other legal remedies. If parties cannot reach a mutually acceptable settlement during the mediation conference, they are free to arbitrate or litigate their dispute as if mediation never took place.
– Lauren Bunting is the Broker of Record for Keller Williams Realty of Delmarva in Ocean City.