Real Estate Mediation 

Mediation is required by the California Association of REALTORS® Residential Purchase Agreement (“RPA”) prior to filing a lawsuit or arbitration.  Mediation can be an exceptional tool to avoid costly litigation.  It is advisable to be represented by legal counsel during a mediation, but not required.  Remember – mediation puts the parties in charge of the outcome; a lawsuit or arbitration will ultimately be decided by a judge or jury and is often analogous to as simply “rolling the dice” on the outcome

The requirement for mediation prior to filing a lawsuit or arbitration is designed to allow the parties an attempt to resolve their dispute prior to dramatic escalation (typically resulting in spending thousands upon thousands in legal fees and deeper disagreement over resolution).

As voluntary mediation technically cannot be “forced”, the contracts typically “punish” a party for not participating in mediation prior to filing a lawsuit or arbitration claim.  The RPA states that if a party fails to request or attend mediation prior filing to a lawsuit or arbitration, they will not be awarded any attorney’s fees or costs, even if they are ultimately the prevailing party in that litigation.

What does that mean?  For example, the RPA and many contractual agreements contain a provision whereby the “prevailing party” in any lawsuit or arbitration will be awarded their attorneys fees and costs, on top of any actual recovery in the lawsuit or arbitration.  These “attorney’s fees provisions” can be extremely powerful tools in litigation.  It is not uncommon for well over six-figures in attorney’s fees and costs to be incurred in any type of dispute taken through a trial or arbitration.

Therefore, failing, refusing or forgetting to demand or attend mediation prior to litigation under the RPA can end up costing that party, even if they prevail, substantially.  Moreover, given the inability to recover attorney’s fees and costs, significant leverage is lost immediately to that party who fails to comply with the mediation requirement.  An attorney who forgets this element before filing a lawsuit on behalf of their client is open to a malpractice claim (and will look foolish to the opposing party and their own client once they find out).

Thunder Stone has successfully mediated many conflicts with purchase agreements, and when mediation was not an option due to the other party's hesitance- we were  still able to demonstrate due diligence on our clients behalf.