What is Mediation?
An unfortunate reality of real estate is that there is the potential for things to go wrong – often very wrong. Mediation can be the one option to resolve these wrongs or any disputes about a contract and it is built into Texas real estate contracts. Paragraph 16 of the 1-4 Family Residential Contract provides the option for buyers and sellers to decide in advance of these potential conflicts that they will pursue the mediation option before lawyering-up, so to speak. A simple check box is all it takes to agree to pursue mediation and we highly recommend it when buying or selling your home.
If you think you’ve reached the point where simple back and forth communications have broken down in your real estate negotiations, here are some things to know about mediation:
- Both parties select a mutually acceptable mediation service or provider.
- There is a fee for this mediator or service.
- The fee is to be split between parties (although payment of the mediation fee can be negotiated as a part of its resolution).
- Parties can have attorneys present to represent them through the mediation but are not required to do so.
- Mediation is not just reserved for disputes between buyers and sellers, but can be used between agents, between agents and clients, and between parties to a contract and service providers as well.
- It can be quick – usually dates can be set within a few weeks and resolution takes only a few hours or days.
What Does Mediation Look Like Exactly?
Step 1: All parties arrive at the mediator’s office and the mediator gives a brief overview of the process. The object of mediation is to find a resolution that all parties can live with, not to prove someone right or wrong or more right or more wrong. After the mediator sets the ground rules, the parties separate into different rooms.
Step 2: The mediator will meet with one party first, listening to their concerns and coming to a proposed settlement that this party wishes to present to the opposing side. Any information given to the mediator is confidential unless specifically authorized to be released to the other side.
Step 3: The mediator then proceeds to meet with the second party and listen to their concerns. The mediator (if authorized) presents the proposal from the first party and then hears and prepares a response, or counter. Again, any information presented or discussed during this mediation is strictly confidential unless express permission is given to release that information to the opposing side.
Step 4: The mediator presents the counter to the first party and then proceeds back and forth between the two sides until one of the proposals is accepted as satisfactory to both sides.
In general, there is no “winner take all” scenario with mediation. Instead, the goal is to come to a middle ground through compromise. Neither side should expect to walk away with absolutely everything. Mediation is designed to solve the conflict with the best outcome for both parties, while the other option, getting lawyers involved, often results in a clear cut “winner.”
Other important things to note:
- Resolution of mediation is confidential.
- The mediator does not represent either side and makes no decisions on behalf of the parties. They must come to an agreement themselves, the mediation process is just meant to assist in finding that common ground resolution.
- The mediator has no power to enforce the agreement.
- If mediation is not successful, meaning both sides can’t agree, then the parties would then still have the option to pursue litigation.
Overall mediation can be a valuable as a time and money saving option to help resolve major disputes in a real estate transaction. Be sure you note whether the mediation checkbox is marked in Paragraph 16 of your contract – whether you want to use mediation or not – it is important knowledge in your transaction.
image courtesy of dalbera