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
Continuous beam on top of supporting walls, usually constructed of concrete and often having steel rods for additional strength placed within it. Supplies lateral support as well as ...
Same as term contract for deed: Method of selling and financing property whereby the buyer obtains possession, but the seller retains the title. ...
Section of the Internal Revenue Code applies to assets used in a trade or business,. In general, gains on section 1231 assets are taxed at capital gains rates, and losses are considered ...
The definition of a service fee or brokers fee in real estate is a flat fee paid to a real estate agent or broker in addition to the commission for the sale or purchase. This is to cover ...
Same as term government rectangular survey: Way in which the U.S. government uses to subdivide public land. Land is designated as either a base line (East-West) or principal meridian line ...
Money set aside to buy new assets when the older ones are no longer appropriate for the intended use. An example is when the landlord must replace a deteriorating and malfunctioning air ...
The return by owners of a property investment usually through a depreciation allowance. a clause in a contract permitting the prior owner of real estate to recover under certain ...
House modeled after the dwellings constructed by the Pueblo Indians in the American southwest. A pueblo or adobe style house is made from adobe brick or materials simulating adobe brick. ...
Condition that affects the probability of losses or perils occurring. An example is possible earthquake or flood damage to a house. ...
Have a question or comment?
We're here to help.