Explore Mediation as First Stop to CRE Dispute Resolution

October 11, 2017
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When you think about settling a dispute with a tenant without going to court, arbitration as an alternate dispute resolution method might immediately come to mind. That’s because arbitration is widely known and talked about in commercial real estate. But before you pursue arbitration, consider resolving a dispute by submitting the dispute to mediation. Mediation is typically faster and more economical and efficient than either fighting in court or using the more traditional out-of-court strategy of arbitration. Plus, mediation fosters, rather than destroys, the landlord-tenant relationship by letting you and the tenant work together to create a mutually satisfactory solution. And if the mediation doesn’t work, you can always move on to arbitration or the courts. Making it your first step in the process is worth it.

But you’ll need to know what exactly mediation is and how it works. Mediation is a dispute resolution technique that lets parties solve their own disputes. Although many people think mediation is the same as arbitration, it’s not. With arbitration, either one arbitrator or a panel of three arbitrators decides your dispute after weighing the merits of both sides. With mediation, one mediator listens to both sides and helps them reach a solution. The mediator doesn’t decide anything—he or she has no decision-making authority. Rather, the mediator is really an agent of realistic thinking (a “neutral”) whose role is to get the parties talking so they can fashion their own solution. The mediator can propose solutions and use his or her knowledge and experience to help the parties resolve their differences.

Here’s where it can get a little tricky: You’ll need to choose mediators and mediation services.

The best-known resources are:

  • Popular dispute resolution service providers. Many people choose to mediate their disputes at the most well-known mediation service providers—such as the American Arbitration Association (AAA). But even though the AAA is one of the largest and most popular providers of dispute resolution services in the nation, it’s not the only one. For example, JAMS and many smaller private providers offer dispute resolution services.
  • Panels. Community organizations, the federal government, and various court systems have created mediation panels to hear disputes.
  • Private companies. Some private companies also offer mediation services, for a fee.
  • Ad hoc. There are many “ad hoc” mediations taking place—that is, the parties to a dispute will directly contact a mediator whom they know, rather than use a mediation service. But often parties in disputes have difficulty agreeing on a mediator. That’s why it can be a money and time saver to name a mediation service in the lease.

For further explanation of how you can use mediation for a fast and economical way to settle disputes, and a Model Lease Clause that you can put in your leases with tenants to ensure mediation is used in case of a dispute, see “Use Mediation Instead of Jumping to Arbitration or Court Over Dispute,” available to subscribers here