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Alternatives to Litigation Real Estate Terms and Examples

By Edited Nov 15, 2016 0 0

1) Nonadjudicate Alternatives-

Definition: When parties come together to make a mutual agreement over a problem.

Example: Sally sold Jim her house for $350,000. To close escrow Jim demanded he receive a $3,500 credit because of a broken fireplace. Sally didn’t want to give Jim the credit, but they eventually compromised on a $2,000 credit.

Elements:

a)     Two parties having a problem- Jim wanted a $3,500 credit, but Sally did not want to give him the money.

b)    Two parties compromise themselves- Sally eventually agreed to a $2,000 credit.

c)     No court involved- Sally and Jim compromised themselves and did not need to go to court to settle the agreement.

2) Adjudicative Alternatives-

Definition: When a third party makes a decision for two other parties over a problem.

Example: Ted sold Terry his house for $1,000,000. During escrow Terry wanted a $50,000 credit for a cracked foundation. Ted and Terry could not come to an agreement because Ted refused to give the credit.  Ted and Terry had to go to court and get a judge to settle their conflict, eventually rewarding Terry a $25,000 credit for the cracked foundation.

Elements:

a)     Two parties having a problem- Terry and Ted cannot agree on a credit for the cracked foundation.

b)    Two parties cannot compromise themselves- Terry wanted a big credit of $50,000 for a cracked foundation and Ted refused to give it to him.

c)     Court involvement is needed- Terry and Ted have to go to court and Terry is awarded $25,000 for the cracked foundation.

3) Mediator-

Definition: A person who helps bring together two parties to come to a mutual agreement.

Example: Sid and Mary cannot decide on the listing price of their house. Polly, their realtor showed them the comps for their house and showed them things their house had that the others didn’t to increase the price. Eventually Sid and Mary agreed on a listing price of $450,000 with the help of Polly.

Elements:

a)     Two parties having a problem- Sid and Mary could not agree on a listing price for their home.

b)    Third party shows obstacles- Polly comes along and shows Sid and Mary the comps that compare to their house that they should base their selling price off of.

c)     Third party helps the two parties resolve their problem- With Polly’s help, Sid and Mary were able to come to an agreement of $450,000 on the listing price.

4) Caucus-

Definition: When a mediator meets with the disagreeing parties individually to help resolve their problem.

Example: Sarah cannot agree on a price to sell her home to Henry for.  Ken is the realtor representing both parties separately. Ken wants to help solve Sarah and Henry’s problem so he can sell the house and make double commission. Ken meets with each party individually and eventually gets them to agree on a price of $555,000.

Elements:

a)     Two parties having a problem- Sarah cannot agree on a price to sell her home to Henry for.

b)    Mediator tries to work out the problem- Ken tries to solve their problem by getting Sarah and Henry to agree on a price.

c)     Mediator meets with each party separately to solve the problem- Ken meets with Sarah and Henry separately and gets them to agree on a price of $555,000.

5) Arbitrator-

Definition: A third party who makes a decision on two parties problem after they have been presented all evidence.

Example: Nancy rented out a condo to Mark for $1,500 a month for one year, plus a deposit of $2,000. At the end of the rental agreement Nancy refuses to pay Mark his deposit because she says Mark destroyed the condo. Jack, a neutral third party takes a look at the condo and determines Mark ruined the carpet, countertops and walls in the condo. Jack decides that Mark is not entitled to his deposit back because Nancy will have to put much more than $2,000 into the condo to repair it.

Elements:

a)     Two parties having a problem- Nancy will not give Mark his $2,000 deposit back.

b)    Third party- Jack came in to examine the evidence to make a decision on the problem.

c)     Decision is made with help of third party- Jack decides Mark destroyed the condo and Mark does not deserve his deposit back.

 

 

6) Strike List-

Definition: A list of possible arbitrators that is sent to the parties having a disagreement.  Each party is given the choice to cross off any names that they do not see fit.

Example: Tom refuses to pay Julie (an old friend) her deposit back from renting Tom’s house. Tom and Julie cannot come to an agreement so they decide they need an arbitrator. A list is sent to both Tom and Julie with roster of people including their friends that could be possible arbitrators. Tom and Julie both decide to cross off all their mutual friends because they are not neutral parties.

Elements:

a)     Two parties that need an arbitrator- Tom and Julie cannot agree on if Julie deserves her deposit back.

b)    A list- Tom and Julie receive a list of possible arbitrators.

c)     Striking of names- Tom and Julie both decide to cross off all the names of their mutual friends because they are not neutral third parties.

7) Subpoena Duces Tecum-

Definition: A court order that requires the attendance of a witness and for them to bring book, records or other documents.

Example: Taylor and Bob rented a condo together for one year. For the last 3 months of the rental agreement the owner of the condo claims he did not receive rent from Taylor and Bob. Taylor claims he paid Bob to pay the owner of the condo. The arbitrator tells Taylor and Bob they need to come to court to testify and Taylor needs to bring records of his bank statements and checks to show he paid Bob.

Elements:

a)     Problem that calls for courts to help- The owner of the condo never received Taylor and Bob’s rent for the last 3 months.

b)    A court order- Taylor and Bob are called into court to state their side of the story.

c)     Documents- Taylor is required to bring in bank statements and checks to prove that he paid Bob the money for rent.

8) Statement of Issues-

Definition: A document from a commissioner that lists the rules that are being violated by someone.

Example: Richard has been a real estate salesperson for one year and does not have a BA degree. During this year he completed all the classes required to get a brokers license. He decides at the end of one year to apply for a broker’s license and take the test. The commissioner sees that Richard is not qualified because he does not have a BA or 2 and ½ years of experience as a realtor.  The commissioner issues a document to the courts and Richard saying he violated the rules because he applied for a broker’s license without being fully qualified.

Elements:

a)     A violation -Richard applied for his broker’s license before being fully qualified.

b)    Commissioner sees violation- The commissioner notices Richards violation.

c)     A document- The commissioner issued a document stating Richard did not have a BA or 2 and ½ years of experience before applying for his broker’s license.

9) Accusation-

Definition: A document that states all of the issues being violated in a property rights hearing.

Example: Tucker, a real estate agent, has his parents buy a house from one of his clients for Tucker to live in. Tucker does not inform the sellers of the house that the buyers are his parents. Later the seller finds out and alerts the commissioner. The commissioner makes a document that states Tucker illegally used his real estate license to get a property for himself at well below market value.

Elements:

a) A property violation- Tucker used his real estate get a house at a really good price.

b) Commissioner reports- The commissioner found out because the seller of the house reported Tucker.

c) List- The commissioner makes a document that says Tucker violated the rules by using his real estate license to get a house for well below market value.

 

10) Restricted License-

Definition: A license that is restricted in some form. In real estate, a restricted license may only allow a salesperson to work for one particular broker.

Example: Gary was issued a real estate license under the agreement that he would finish his Real Estate Law class.  Until Gary finishes his Real Estate Law class he can only work for the broker Emily.

Elements:

a)     A license- Gary is issued a real estate license.

b)    Restriction- Gary must finish his Real Estate law class and only work for Emily until he does.

c)     Not allowed to work for another broker- Gary is not allowed to work for any other brokers and that is the restriction put on his license.

 

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