Most real estate transactions are handled smoothly with buyers and sellers being satisfied at the close of escrow and thereafter. Disputes are somewhat uncommon, but they do arise. They may concern earnest money, property condition, property boundaries or other aspects of the transaction. Many disputes involve undisclosed material facts about the property that the buyer discovers post-close of escrow.
Per the Arizona Association of REALTORS® (“AAR”) purchase contract, these disputes must be submitted to mediation before filing a lawsuit, meaning legal action is not always necessary. Mediation allows for a legally qualified objective third party to review the terms of the dispute and work with the relevant parties to achieve a resolution.
Because of the prevalence of mediation, most Arizona real estate disputes are resolved outside of court, saving both time and legal expense. However, there are some exceptions to the rule. This guide breaks down when to settle Arizona real estate disputes and when to go to trial.
The AAR Purchase Contract
The requirement to attempt mediation before litigation is part of the Arizona Association of REALTORS® Purchase Contract, which was created to help buyers and sellers effectively resolve disputes during the transaction without having litigation costs interfere with the prospects of achieving a successful settlement. Section 7(c) of the Contract outlines the process by which the parties submit the details of their disputes to a legally qualified mediator. It is well documented that the vast majority of disputes get resolved prior to a trial.
Oftentimes it makes the most sense to settle a case—even if you have to compromise—with a certain outcome than to incur the expense of a trial and carry the risk of receiving an unfavorable outcome.
The Drawbacks of Trial
If you are engaged in a real estate dispute that does not warrant litigation, it is typically in your best interest to settle outside of court. Trial is a very serious process and is reserved for cases of last resort. Trial can be costly and disputes can sometimes take months or even years before it reaches the time for trial. This is because the rules of procedure allow for a discovery period where the litigants engage in efforts to uncover documents and facts pertaining to the case
With mediation, buyers and sellers have some control over the outcome. The process is flexible, and it typically reveals the parties’ true interests. Settling may also restore goodwill between the parties. While mediation may not be appropriate for all cases, it should be considered as a possible avenue to resolve the case if both parties are amenable to the process.
How to Successfully Settle Arizona Real Estate Disputes
Reaching a resolution is not always easy, but these are three ways to improve your odds of a successful mediation.
- Preparation. Mediation is less intense than litigation, but parties should arrive prepared as though for trial. Collect all communication and documentation, submit it to the other party and have an experienced real estate attorney present your case.
- Timing. It is understandable that parties may want to minimize the time spent in mediation, but quality is more important than quantity. Aim for a mediation day that is within a reasonable time frame of the dispute but does not rush the preparations.
- Expertise. Finding the right mediator will make a significant difference in the outcome of the process. Beyond legal training and training in resolving disputes, the mediator should have real estate knowledge and real estate dispute experience.
Find an Experienced Arizona Real Estate Attorney
At MacQueen & Gottlieb, we have significant experience with various types of real estate disputes in Arizona. Our firm can help you collect all the necessary evidence, review it for accuracy, propose a fair settlement, and pursue legal action if necessary. If you are involved in a buyer/seller dispute, contact us today at (602) 562-7218 to schedule an initial consultation or make an appointment online.