By becoming a member, every REALTOR® binds himself or herself and agrees to submit to arbitration all disputes as defined by Article 17 of the Code of Ethics.
The duty of REALTORS® to arbitrate is based in the Code of Ethics, specifically Article 17 which provides:
- In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS® (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall submit the dispute to arbitration in accordance with the regulations of their Board or Boards rather than litigate the matter.
- The obligation to participate in arbitration contemplated by this Article includes the obligation of REALTORS® (principals) to cause their firms to arbitrate and be bound by any award.
Advantages to Alternative Dispute Resolution
- It solves problems, rather than simply deciding the dispute.
- It resolves disputes quickly, usually within weeks, rather than years.
- It prevents future conflicts, as well as resolving present ones.
- It emphasizes constructive relationships, rather than adversarial positions.
- Customer relationships survive, so goodwill and potential referrals are preserved.
- It allows parties to negotiate based on their interest, to understand their own needs, and decide what they are willing or not willing to concede.
- It is confidential, not a public proceeding or a matter of public record.
- It allows those most familiar with the problem, the disputing parties, to create the solution, which ensures that the solution will work.
Home Buyer / Home Seller Alternative Dispute Resolution Options
Arbitration is a process, not unlike court (but much less formal), where an independent neutral person hears evidence and issues a decision, known as an “award”. This award is generally final and binding on the parties in the case. Private and confidential, it is designed for quick, practical, and economical settlements.
Mediation is a process whereby a neutral person, the mediator, assists the parties in reaching a mutually acceptable resolution to their dispute. The mediator may offer suggestions and point out issues that the disputants may have overlooked, but resolution of the dispute rests with the disputants themselves. The mediator does not have the authority to make a binding decision, unlike arbitration, where the arbitrator renders a decision that is final and binding.
Med-Arb, as the name implies, is a blend of both mediation and arbitration. The parties agree to first attempt to resolve the dispute through mediation. If this fails to produce a settlement within a specified time period, then the matter is referred to arbitration for a final-and-binding decision by an arbitrator who, based on the agreement of the parties, may be the person who served as the mediator.
Advisory arbitration, in most respects mirrors traditional arbitration, described above. It differs, however, in that it focuses on specific issues in a dispute and decides them in an award that is not binding on the parties.
Fact-finding is investigation of the dispute by a third party who examines the issues and facts in a case and then issues a report on his findings, which might or might not ecommend settlement procedures. The fact-finder’s report is nonbinding.
Mini-tril is a structured settlement procedure in which attorneys present their best case in an abbreviated form with experts, if appropriate, before senior executives of the companies involved and a neutral who chairs the presentation. After the presentation, the senior executives meet for a settlement discussion. In the event that the senior executives are unable to settle the dispute, the neutral may be empowered to mediate and or provide a nonbinding advisory opinion regarding the likely outcome if the case were litigated.
Mediation and Arbitration
The two most popular types of dispute resolution are mediation and arbitration.
How Does Mediation Differ From Arbitration?
Arbitration is less formal than litigation, and mediation is even less formal than arbitration. Unlike an arbitrator, a mediator does not have the power to render a
binding decision. A mediator does not hold evidentiary hearings as would an arbitrator but instead conducts informal joint and separate meetings with the parties to understand the issues, facts, and positions of the parties. The separate meetings are known as caucuses. In contrast, arbitrators hear testimony and receive evidence in a joint hearing, on which they render a final and binding decision known as an award.
What are some of the advantages of mediation?
- Parties are directly engaged in the negotiation of the settlement.
- The mediator, as a neutral third party, can view the dispute objectively and can assist the parties in exploring alternatives which they might not have considered on their own.
- As mediation can be scheduled at an early stage in the dispute, a settlement can be reached much more quickly than in litigation.
- Parties generally save money through reduced legal costs and less staff time.
- Parties enhance the likelihood of continuing their business relationship
- Creative solutions or accommodations to special needs of the parties can become a part of the settlement.
- Information disclosed at mediation may not be divulged as evidence in any arbitral, judicial or other proceeding.
Sources of Alternative Dispute Resolutions
The Dispute Resolution Center
110 N. Fourth Ave, Suite 100
Ann Arbor, MI 48104
Phone: (734) 222-3745
123 E. Washington Ave.
Howell, MI 48843
Phone: (517) 546-6007
Construction Arbitration Services (CAS)
Phone: (586) 741-0870
Fax: (586) 790-4774
Dallas, TX. Office
2777 Stemmons Freeway
Dallas, TX 75207
Phone: (214) 638-2700
Fax: (214) 638-4054