Real Estate Dispute Resolution Methods

Real estate disputes are legal conflicts that arise from the use or the purchase and sale of pieces of real property. Real property is a piece of land and structures that are attached to the land, such as buildings, swimming pools, and garages. It also includes an important bundle of rights to the property, such as the right of possession and the right of control.

Real estate disputes can be worth a lot of money. In fact, for many people, their home is the most economically valuable thing they own. If these disputes are taken through the court system, they can take a long time to resolve and may be very expensive to litigate. Thus, it is often common for people involved in a real estate dispute to seek alternative forms of dispute resolution.

How to Resolve Real Estate Disputes?

The first step in any real estate dispute is to attempt to negotiate a solution. This is the preferred way to resolve any legal dispute because prosecuting a lawsuit is expensive.

Failing a resolution out of court, a person can hire an experienced real estate attorney and file a lawsuit in the court where the property is located. Legal actions involving real property must be brought in the state where the land is located. This is known as the “local action doctrine.”

In most real property lawsuits, an award of monetary damages will resolve a real estate dispute. An award of monetary damages serves to compensate the victim for their losses. Other possible kinds of remedies that might be available in real estate disputes include:

• Injunctions: A court might issue an injunction ordering a party to cease construction efforts, etc.
• Mediation or arbitration: This involves a neutral party helping to facilitate the resolution of a dispute between the parties. Arbitration and mediation use different procedures, but the goal is the same – to get the parties to resolve their legal dispute.
• Various fines or fees: the imposition of fines or fees is a common remedy in cases involving violations of city or county zoning or land use violations
• Specific performance: A court might require one party to a contract to perform their contractual obligation. This could mean that a seller could be forced to sell the property to the buyer, even if the seller has changed their mind and is willing to give the money back (even if the seller adds a premium for the buyer’s trouble). Sometimes, a court will decide that compensating the buyer with money just won’t suffice – after all, the buyer might not be able to buy an identical piece of property.
• Various other remedies: For example, a court might place a judicial lien on the property if the owner of the property has a loan tied to the property and is behind in payments

Is Dispute Resolution Available?

If a contract involves a real property dispute, the parties should review it carefully to see if it contains an arbitration provision. Today, it is common for parties to include arbitration clauses in their contracts to avoid incurring the cost of expensive litigation in the event of a dispute.

An arbitration clause in a contract might explain how the arbitration should proceed. Typically, in an arbitration, the parties select a neutral third party to hear the evidence and decide the outcome of the dispute. The arbitrator functions like a judge but has broader powers and can often design a creative resolution. The arbitrator’s decision is binding (that is, final and enforceable). Arbitration awards can be set aside by a court only in very limited circumstances, for example, if the arbitrator engages in misconduct.

If there is no arbitration clause in the relevant contract or if there is no contract, the parties can negotiate how they want arbitration to proceed. For example, the parties can decide whether lawyers will be present and the standard of proof that will apply.

Another method for dispute resolution is mediation. In mediation, a neutral third party serves as a mediator. The mediator brings the parties together to talk and present their arguments in an informal manner and setting. The mediator works to bring the parties to a compromise solution to their dispute. The primary distinction between an arbitrator and a mediator is that the mediator’s decision is not binding. Mediation is often used as a shortcut to give the parties an idea of what result they might achieve if they took the matter to court.

Whether through arbitration or mediation, the result should be written up in a signed settlement agreement. This is known as a Memorandum of Settlement (MOS). A MOS should specifically state that it is admissible as evidence in any action or legal proceeding about the dispute. This ensures that a court can enforce the MOS if any party decides not to respect the agreement. The signed MOS becomes an enforceable contract between the parties.

If arbitration or mediation cannot bring parties to a resolution of their differences, either party is free to pursue a lawsuit in court. Remember that a lawsuit must be filed in the court of the state and judicial district where the property at issue in the lawsuit is located.

Before trial, the parties will go through the process of discovery, where they will turn over to each other copies of any evidence they might use, and they will have the opportunity to formally examine any witnesses to see in advance what their testimony will be. Courts today also mandate appearances of the parties at settlement conferences, where the judge and the lawyers will work to settle the case. Most lawsuits are settled before trial.

If the case goes to trial, the parties will present evidence to a judge or a jury, whichever is selected by the person who files the suit. The judge or jury decides the case and the nature of the award if it finds that an award is appropriate.

The exact nature of the remedy declared by the judge or jury will depend on the nature of the case and the remedy that the plaintiff requested in their initial complaint. For instance, in a real estate contract claim breach, the party can request specific performance. State laws will determine which types of remedies are available.

An experienced real estate lawyer can help by analyzing the facts, knowing the applicable local law, and determining what type of remedy is the most appropriate to ask for in a particular case.

Do I Need a Lawyer for Help with Real Estate Disputes?

You should hire an experienced local real estate attorney for help with any real estate conflict. Your attorney can research your area’s law and help determine your best course of action.

If a solution cannot be found through negotiation or other alternative dispute resolution process and the case has to go to court, your attorney can represent you at court hearings and trial, if necessary. You will likely get the best outcome with an experienced real estate lawyer representing your interests.