Most Purchase Contracts contain a provision for the seller, buyer, and realtors to use arbitration or meditation if a conflict arises. While it is not a requirement to sign that portion of the contract, if a party chooses to sign it they are bound to either arbitrate or mediate disagreements. Not all parties have to sign, but the ones that do will not have to choice to file a law suit in any court of law.

What is the difference between mediation and arbitration?

Mediation – a process by which the disputing parties arrive at a solution together.

• GLAR makes the procedural rules (see attached)
• Can choose mediator from list provided by GLAR
• If parties can’t reach an agreement then mediation fails
• Mediator acts as a buffer between the parties

Arbitration – an adversarial process by which one side opposes the other with a neutral and disinterested third party whereby the third party weighs the evidence and imposes a binding solution.

• GLAR makes the procedural rules (see attached)
• Decision is final
• Decisions need not be based on law, cases or regulations – the arbitrator can decide based on what she thinks is “right.”
• Get to choose arbitrator from list provided by GLAR (unlike in court where the judge is assigned)

What if there was fraud or misrepresentation which was a material factor in inducing one of the parties to enter into the contract?

• So long as the party agreed to the provision regarding arbitration and meditation, the party must arbitrate or meditate unless the fraud was in direct relation to the actual clause.

Click here to see the procedures of the Great Louisville Association of Realtors.