What is arbitration and mediation?
Arbitration is an ADR procedure that is usually binding. In arbitration, the parties agree to resolve their dispute outside the court system, using an arbitrator instead. Mediation is an ADR procedure which is non-binding and takes place using a mediator who is normally chosen by the parties. The mediator will try to settle the case. If the case settles, the settlement is normally reduced to writing which is normally binding on the parties.
Many real estate purchase and listing contracts have provisions for arbitration and/or mediation of any disputes that may arise under that contract. Arbitration and mediation are not synonymous. They are both alternative dispute resolution methods. They serve as an alternative to civil court. Arbitration is a process in which a neutral person or persons, the arbitrator, presides over a formal hearing to determine whether a contract has been breached, whether there has been fraud, etc. The decision of this arbitrator is usually binding, meaning there is no appeal to a higher court and the decision is final once issued. Mediation is a process in which the parties come together with a neutral facilitator to try to fashion their own resolution to a dispute. The mediator is there to assist the parties in reaching a compromise, but is not there to be the ultimate decision-maker in the case. It is important to understand these distinctions, and to understand what you have agreed to, before si
