(Business) Relationship Problems

At the beginning, it’s all smiles and heart-eye emojis. There is a feeling of elation that they’ve found “the one.”

But sometimes the shine fades. That one isn’t willing to compromise. Someone accuses the other of being cheap. Others start to look more appealing. Before you know it, you’re reading a Notice of Termination (Form TER) and fighting over the deposit money.

Sorry, did you think I was talking about a romantic relationship? Unfortunately, this is what can be a very typical buyer-seller relationship. Everything looks great at first, but then issues are uncovered and they cannot be resolved, no matter how spectacular you are as an agent, and the relationship ends. If the buyer and seller have found themselves with irreconcilable differences, what can you do?

When the relationship is beyond saving and the parties can’t seem to agree between themselves who is going to get to keep the dog – I mean, the deposit – then mediation may be a reasonable option for resolving the dispute. Your local Realtor® association offers to its members, either on its own or through the statewide cooperative, a mediation system for buyers and sellers. Based on the questions and comments we receive on the PAR Legal Hotline, it appears that this process is a mystery to most of you. As such, you might be less likely to recommend that the client use it. Allow me to de-mystify the process.

Disclaimer: While this is an overview of the mediation process generally, local association practice may vary slightly. Please contact your local association for details.

The process can be started simply by contacting the local association for a Request to Initiate Mediation form. The requesting party completes the form and submits it to the program administrator with a copy of the parties’ written agreement to mediate (See Paragraph 27 of the Standard Agreement for the Sale of Real Estate). After the completed application has been submitted, the program administrator will send each party a list of qualified mediators and their fee schedules. The parties then can review the list and either select or challenge the mediators on it. A mediator is not selected without giving the parties an opportunity to provide input.

Once a mediator is selected, the program administrator will contact them with the assignment. The mediator then contacts the parties to set the date, time and place of the mediation conference. The parties also pay the mediator’s fees equally prior to the conference.

Mediation is not meant to be an adversarial process and there is no need to (although the parties are certainly allowed to) hire an attorney to be present, formally present evidence or question the other party. At the conference, the mediator will facilitate a conversation between the parties so that the dispute can be resolved. He or she will not decide the matters or force the parties to reach a settlement. Rather, any agreement that results from the mediation will have come from the parties themselves. The entire process is meant to empower the parties to resolve their own disputes rather than have someone make a decision for them.

When mediation works, it can save the parties time and money over litigation, which oftentimes includes an order to attempt mediation anyway. It can also salvage relationships – not necessarily to the point that the buyer and seller are willing to get back together, but at least to the point that they can peacefully coexist.