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Understanding The Mediation Clause In The California ResidentialPurchase Agreement Is CrucialWhether you are buying or sel...
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Understanding The Mediation Clause In The California Residential Purchase Agreement Is Crucial

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Understanding The Mediation Clause In The California Residential Purchase Agreement Is Crucial

  1. 1. Understanding The Mediation Clause In The California ResidentialPurchase Agreement Is CrucialWhether you are buying or selling a residence inevitably you will discover a clause in the StandardCalifornia Residential Purchase Agreement under paragraph 26 entitled Dispute Resolution. Thisclause is extremely important and provides the parties with alternatives to the expense and headacheof having to litigate their disputes, should any arise out of the agreement. The first section under thisclause is its sub-section A; entitled Mediation. The second section of the clause is entitled Arbitration.If both parties place their initials under the arbitration section they are giving up their rights to litigatetheir disputes in a court of law and agreeing instead to use arbitration as their forum to alternativelyresolve their disputes. Unless crossed out in the agreement the prevailing party will be entitled torecovery of his attorney fees, awarded by the arbitrator, possibly all, but sometimes less, but there isone major proviso, one all important step one must take before legal fees are available to him.That step is to either offer or accept mediation to first try to resolve any disputes. The important partin the agreement is first either to refrain from litigation or arbitration and offer to mediate or agree tomediate any dispute or claim to which this paragraph applies:1. Any party commences an action without first attempting to resolve the matter through mediation.2. Before commencement of an action, refuses to mediate after a request has been made, then thatparty shall not be entitled to recover attorney fees, even if they would otherwise be available to thatparty in such action. This mediation provision applies whether or not the arbitration provision isinitiated.What this means is simply, whether a party seeks resolution of a claim either through arbitration, or ifnot through the court, a party who either does so without first offering to mediate, or a party whenoffered the right to mediate rejects it, that party will lose any rights to recover attorney fees. However,the right to attorney fees is still available to the party who offered to mediate.I cannot begin to tell you how many people have come to me either as an attorney or mediator whoeither were never told about the meaning of these clauses, or having been told they just did notunderstand. Therefore they did not offer to mediate or failed to accept mediation as a way to resolvetheir disputes. If parties to these contracts, as well as their real estate agents knew and understoodthe severity of these clauses, they could simply follow the correct procedure and save themselves agreat deal of money, by having their attorney fees awarded to them if their claim ended in arbitration.Southern California Mediation Partners, LLCSteven J. Eichberg, Attorney-Mediatorreal estate sherman oaks

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