Disputes in California real estate transactions can arise from a variety of issues, ranging from earnest money deposit disagreements to undisclosed property defects. When these conflicts occur, the California Association of Realtors (CAR) Residential Purchase Agreement (RPA) provides an important step for resolution: mediation. This process, designed to avoid litigation, is not only efficient and cost-effective but also a prerequisite for recovering prevailing-party attorney’s fees in most disputes.
Here’s what you need to know about mediation, how it works, and why it’s an effective tool for resolving real estate disputes.
Why Mediation Is Required
Under the CAR RPA, buyers and sellers must attempt mediation before pursuing litigation or arbitration if they want to retain the right to recover attorney’s fees. Skipping this step or failing to engage in good faith can prevent a prevailing party from recovering these fees, even if they win in court.
Additionally, CAR offers access to a mediation panel with discounted rates for the first two hours of mediator time, making it a cost-efficient first step in resolving disputes.
Common Issues Addressed in Mediation
Mediation is particularly suited to addressing a wide range of disputes that arise during or after real estate transactions, including:
Earnest Money Deposit (EMD) Disputes
- Whether a buyer is entitled to a refund.
- Whether the seller can justifiably retain the deposit due to the buyer’s breach.
Failure to Disclose
- Claims that the seller or their agent failed to disclose material defects or other key facts about the property.
Breach of Contract
- Issues with contingencies, timelines, or obligations under the purchase agreement.
Contingency Disputes
- Loan or financing contingency issues, including whether deadlines were met or properly removed.
- Inspection and appraisal disputes, such as disagreements over property condition or low appraisals.
Title or Boundary Issues
- Conflicts over easements, encroachments, or undisclosed liens.
- Disputes involving unclear or incorrect property boundaries.
Repairs and Property Condition
- Seller’s failure to complete agreed-upon repairs before closing.
- Delivery of the property in a condition inconsistent with the purchase agreement.
Closing or Escrow Issues
- Delays caused by a party’s failure to perform contractual obligations.
- Disputes over prorated taxes, unpaid HOA dues, or incomplete documentation.
Agent-Related Disputes
- Allegations of misrepresentation, negligence, or breach of fiduciary duty by real estate agents.
- Dual agency disputes and conflicts over commissions.
Post-Closing Issues
- Discovery of hidden defects or damages after closing.
- Neighborhood disputes, HOA problems, or unexpected zoning restrictions.
Lease or Occupancy Issues
- Conflicts involving tenants in properties sold with leases in place.
- Disputes over early move-ins or occupancy agreements.
Force Majeure and Contract Termination
- Issues involving natural disasters or unforeseen events delaying or canceling transactions.
The Mediation Process
- Mediation is a voluntary, confidential process where a neutral third party (the mediator) facilitates discussions to help the parties reach a mutually agreeable resolution. It’s important to understand that:
- The mediator does not make binding decisions but offers insights into the strengths and weaknesses of each side’s case.
- Mediation sessions usually last about four hours, with the costs split equally between the parties.
- Most mediations today are conducted via Zoom, making them accessible and convenient.
Before mediation, attorneys for each party submit mediation briefs to outline the facts, legal issues, and desired outcomes. These briefs are critical for helping the mediator and opposing party understand the key points of the dispute.
Benefits of Mediation
Mediation offers several advantages, including:
- Cost Savings: Mediation is far less expensive than litigation, both in time and money.
- Preservation of Relationships: This process allows for amicable resolutions, which can be important when agents or neighbors are involved.
- Neutral Insight: A skilled mediator provides an unbiased perspective on the dispute and the potential outcomes of litigation.
- Confidentiality: Unlike litigation, mediation is private, keeping sensitive information out of public records.
Involving Agents and Other Third Parties
The CAR RPA mediation clause applies to buyers and sellers, but agents and brokers are not bound by this provision. However, disputes often involve agents—such as claims of misrepresentation or failure to disclose—and they are frequently invited to mediation. In many cases, agents will participate voluntarily to address concerns and avoid further conflict.
Should You Have Legal Representation?
Although mediation is less formal than litigation, having an experienced real estate attorney by your side is essential. Your attorney will:
- Advocate for your position during the mediation.
- Help prepare a strong mediation brief.
- Assess the fairness of proposed resolutions.
- Draft enforceable agreements if the parties settle.
Contact Experienced Real Estate Litigation Attorneys at Vokshori Law Group Today
Mediation is an invaluable step in resolving real estate disputes. It provides a neutral environment where buyers, sellers, and agents can discuss their concerns, explore settlement options, and avoid the financial and emotional toll of litigation.
Vokshori Law Group is a full-service law firm with extensive experience in the field of real estate law in California. Our California real estate litigation attorneys have helped countless clients navigate mediation to achieve favorable outcomes. If you’re facing a real estate dispute—whether as a buyer, seller, or agent—contact our office to discuss how we can assist you in resolving the matter efficiently and effectively.
Call us at (855) 855-2608 or visit www.VokLaw.com to learn more.
