Real Estate Arbitration

Definition of "Real Estate Arbitration"

Flor Lopez real estate agent
Flor Lopez, Real Estate Agent Charles Rutenberg Realty

The real estate arbitration definition is an alternative way to settle disputes when the parties involved want to avoid a trial. There are some significant differences between an arbitration and a trial that we’ll cover in this explanation. Still, the evidence is presented in such the same way, statements are recorded, and witnesses can be heard. You need to know from the beginning that there is no judge during an arbitration, no jury, and the decision is final without the possibility of appeal.

What does Arbitration Mean?

As we already established that arbitration doesn’t work as a court trial, let’s see how it does work. Through an arbitration, unlike a mediation, an intermediary is the decision-maker, not a judge or a jury, and there is no possibility of an appeal if the decision isn’t satisfactory. There are, however, benefits to arbitration. 


Decisions of an arbitrary dispute are not public, and the press or any outside parties do not have access to any information shared during the arbitration. Another benefit of arbitration comes from the fact that they are less formal proceedings, resulting in a quicker procedure. Unlike a trial, arbitration is much more likely to end in mutually beneficial results, because it involves open discourse and communication between the parties involved. Compromises are more accessible than the strict reading of the law would allow. 


The one downside of arbitration is that the parties involved have only one shot at resolving their dispute. This can lead to higher costs on the parties involved as they want to ensure they have the best defense and experts that money can buy.

What is Arbitration in Real Estate?

When it comes to the real estate market, any type of disagreement between two parties can be resolved through arbitration. Some examples of issues that can be solved through this time-saving practice are costs of repairs, repair and inspection issues, money disputes and incorrect claims about the property’s condition, the state of appliances or fixtures, and so on. The NAR also has procedures that can be used in disputes between realtors or any ethical complaints that a realtor can receive from a client.


It is important to take into account that if there is an accusation of criminal conduct, arbitration shouldn’t be used. When criminal conduct or acts occur, a criminal trial should be the way to go. Also, when the dispute is dealing with complex issues of a legal manner or involving property rights, the legal process of litigation in Civil Court would help the parties involved.

DISCLAIMER: The information presented above should not be taken as legal advice. If you encounter any legal situation or arbitrary disputes, contact a real estate attorney, lawyer, or legal advisor. Every situation can be unique, and the law can differ from one state to another.


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