Three(!) Kinds of Arbitration in Today’s Housing Market

Should Buyers and Sellers Waive Arbitration? Hopefully, It’s a Moot Point

[Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.  If you need legal advice, please consult an attorney.]

Unbeknownst to most home buyers and sellers, modern residential real estate deals — at least in Minnesota — have three, separate arbitration provisions:

One. Between the Buyer and Seller.

Two. Between the Buyer or Seller, and their agent (more accurately, the agent’s Broker).

Three. Between the Buyer or Seller and their title company.

Arbitration vs. Litigation

Normally, however, when people think about arbitration in the context of residential real estate, they’re usually referring to the first type.

My standard counsel to clients:  whether Buyers and Sellers agree to waive arbitration or not is usually a moot point, if both parties do what they’re supposed to.

For Sellers, that means disclosing everything they know about their home (the relevant standard:  not what they think is relevant, but what a reasonable Buyer thinks is).

For Buyers, it means hiring a qualified home inspector, as well as testing for radon; following up on any HVAC issues (if there are yellow flags); and having the main sewer connection to the home checked out.

See also, “The TOO-Clean Seller’s Disclosure“; The ‘What-Will-the-Neighbors-Tell-the-New-Owner?’ Disclosure Test”; and “The TOO-Conscientious Minnesota Home Seller.”



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