Homebuyer/Homeseller Dispute Resolution
The Residential Real Property Arbitration program is a voluntary, optional means of dispute resolution on issues relating to disclosure of material facts pertaining to the property. The system, which serves as an alternative to litigation, is endorsed by the Minnesota Association of REALTORS® and administered by National Center for Dispute Settlement (NCDS). This option should be presented to the parties at or about the time that a listing agreement, a buyer representation agreement or the purchase agreement is signed. The agreement to arbitrate these disputes is enforceable only if all buyers, sellers and licensees representing or assisting the buyers and sellers consent by signing the Arbitration Agreement form. (This is because any of those parties or broker/agents could be named as parties in arbitration.) By agreeing to arbitrate such disputes, the parties give up the right to resolve those issues in court. The Arbitration Disclosure and Agreement is a separate form, not an addendum to the purchase agreement, and failure to sign that form has no effect on the purchase agreement.
Arbitration or Court
Brokers/Agents should review the Rules under which the Arbitration program is administered (available from NCDS). Arbitration is often a quicker, cheaper and simpler means of resolving disputes for buyers and sellers. Parties should be aware, however, of a number of significant differences between use of the arbitration and litigation systems to resolve a dispute, including the following:
* The initial cost of filing a claim is higher for arbitration than for filing a lawsuit.
* The time deadline for filing an arbitration claim is more limited than in litigation.
* The probable length of time from filing a claim until an award or decision is made is often much shorter in arbitration than when litigating a dispute.
* The site of the arbitration hearing is usually at the subject property.
* Appeal and pre-hearing discovery rights in arbitration are very limited.
Brokers/Agents can make available to customers and clients copies of the Arbitration FAQ as well as the NCDS Rules and fee schedule to assist in making the decision whether to consent to arbitration for resolution of disputes over property condition.
The arbitration option should be presented to buyers and sellers at or about the time the purchase offer is prepared. Copies of the NCDS Rules governing the program can be made available to the parties at or before that time. The MNAR standardized purchase agreement contains signature lines for the parties' acknowledgment of receipt of the Arbitration Disclosure and R.R.P.A. Agreement form. Agents should become familiar with the NCDS system, and be aware of whether their office has a policy relating to arbitration.
Demand for Arbitration
To file a demand for Arbitration, contact NCDS to request a Demand for Arbitration or Submission Form as well as Rules the Residential Real Property Arbitration and the fee schedule at (888) 832-4792 or you can download this information from the NCDS website at www.ncdsusa.org.
Print out the MNAR/NCDS brochure "A Guide to Residential Arbitration" (500k)