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What is Mediation in a Seller Disclosure Case?

Posted by Rick Davis on March 16, 2019
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Mediation in a Seller Disclosure Case is an informal process where all the parties are placed into rooms in the same building and a third party (the mediator) goes from room to room with settlement offers until a resolution can be reached or one of the parties ends the mediation.  This process is very effective at resolving disputes without the uncertainty and costs of going to trial.

Many courts now order mediation as part of the litigation process; however, it is not limited to after a case has been filed.  Pre-litigation mediation can be an effective means of resolving disputes before money has been spent on litigation.  Moreover, the most recent version of the real estate contract provided by Kansas City Regional Association of Realtors to local realtors includes a mandatory pre-litigation mediation clause.  As such, seller disclosure mediation is required for most real estate contract disputes in the Kansas City area.

Mediation is particularly useful in seller disclosure disputes because the costs of litigating a seller disclosure dispute can often represent a significant portion of the costs of repairing the defect.  As such, the economics may prevent the buyer from bringing the claim.  As such, seller disclosure mediation can often be a cost-effective means of ensuring that the buyer receives some financial consideration from the seller with regards to the defect.

Historically, a high percentage of cases settle at mediation. With that being said, as neither party is required to accept any settlement offers or recommendations of the mediator, it is possible that nothing is resolved during the mediation. In order to increase the possibility of settlement, the parties should come to the mediation with an open mind as to what the parties might accept as a settlement to avoid the continued cost and uncertainty of litigation. Please keep in mind that in mediation neither side will walk away with everything they want and it is often said that during a good mediation both parties walk away unhappy (one paid more than he or she wants and the other excepted less than he or she feels she is entitled to). On the other hand, it is a great opportunity to find a resolution to a dispute so as to move forward with the other aspects of your business or life. This piece of mind can be extremely valuable.  Moreover, by agreeing to a settlement, the plaintiff avoids the need to collect on a judgment, which can often significantly delay the time it takes for the plaintiff to receive his or her money even if he or she prevails at trial.  This also saves the plaintiff continuing legal fees associated with trying to collect a judgment.

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