Binding Arbitration
A binding arbitration is a way to solve disputes without going to court.
An alternative to the more expensive and lengthy legal procedures, a binding arbitration is basically the process of two parties agreeing (binding themselves) to the decision of an assigned impartial third party that will act as the judge of their dispute.
When a real estate dispute is to be solved by a binding arbitration, this impartial arbitrator – or a panel of arbitrators - must listen to the arguments of the two parties before issuing its judgment; which both parties must comply with. The ruling of a binding arbitration rarely gets reversed later in the court of law.
The whole binding arbitration process starts with a binding agreement in which both parties select the arbitrator (or panel of arbitrators) and the procedures or rules that will govern the judging of possible future grievances. After that, the binding parts can engage in a time-period called “discovery”, where both parties produce factual evidence to protect themselves in the case of a future dispute. That is: they can invoke documentation from the opposing party and even require witness statements regarding specific subjects to be recorded in front of the arbitrator. This is done and recorded as part of the binding arbitration as a way to outline everyone’s view of the case prior to any possible problem arising. With this material serving as evidence, should something happen, all parties can guide themselves toward a fair resolution.
Although most binding arbitrations are voluntary by nature, there are some states - Minnesota, New York and New Jersey, for example - that have adopted obligatory arbitrations on specific cases - mostly dealing with insurance - as a way to clear up litigation workload from courtrooms and speed the traditional legal justice system as a whole.
In many ways, binding arbitrations trumps litigation. It’s more efficient by being faster and less expensive, and has more way room to decide over things that lack legal jurisprudence.
Although once signed you’re basically on your own, it’s a good idea to have a real estate agent and a real estate lawyer to advise you when drafting the binding agreement. Find the best one for you in The OFFICIAL Real Estate Agent Directory®.
Popular Real Estate Terms
In legal terms, the definition of null and void (“void ab initio”) can describe an agreement that has no force or binding power. Therefore, it’s neither valid nor legally ...
Additions made to a structure to protect it from damage due to inclement weather. An example is reinforcing the wood surrounding windows. ...
Documentation of zoning requirements and changes thereto. ...
Charges resulting in involuntary encumbrances against real property derived from legislated law rather than from debts owed to organizations o r individuals. For example, of a homeowner ...
Property title having no encumbrances. In the usual sense this means a title not having a mortgage. Other encumbrances could include judgments or additional financial liens. ...
Same as term annuity: Equal period payments or receipts. Examples of an annuity are annual rental receipts from a real estate investment and cash dividends from a real estate firm's ...
Unable to sell an investment to obtain cash in the short-term without incurring A significant loss. Real Estate is typically not liquid because of the inability to sell property to raise ...
Rights granted to owners of property restricted to conservation use, historic preservation, or some other low density function to sell to other landowners allowing them to develop their ...
The total expenditures required to make a locality suitable for the designated purpose. An example is how much it would cost to build a shopping center on a lot. ...
Have a question or comment?
We're here to help.