HOW THE ARBITRATION PROGRAM WORKS
Arbitration is an informal hearing in front of a neutral third party, the arbitrator, who discovers the facts of the dispute through testimony and documents and then renders a final determination of the dispute, called an arbitration award. The basic structure of an arbitration process is as follows:
- If permitted under state law, parties to a real property transaction pre-commit to submitting their disputes to either binding or non-binding arbitration. Parties must be notified that if they commit to binding arbitration, they give up their legal right to litigate the dispute in the future.
- A dispute arises and a request for arbitration is made to the endorsing association or arbitration company. This request may be accompanied by a written complaint.
- Notice is given to the other relevant parties with a request for response to the complaint.
- A list of qualified arbitrators is provided to the parties. Each party notes those arbitrators that are acceptable to them. The arbitrator lists are then matched and the arbitrator(s) are appointed. There will usually be the option to have one or three arbitrators on the panel.
- The arbitrators shall notify all parties to the dispute of the time and place for the hearing. Parties are also notified that they may be represented by legal counsel.
- Prior to the hearing, limited discovery is allowed.
- At the hearing, each party may open with a statement as to their position on the dispute. Testimony from witnesses may be heard and the witnesses cross-examined. Documents in support of a position are also received at this time.
- The hearing then ends and the arbitrators render an award within a specified time period following the hearing.
Under the NAR arbitration program, associations need to review the information contained in these guidelines and decide whether to develop and implement an arbitration program. Because of the various state arbitration statutes, associations will need to develop their own arbitration programs. This should be done following the guidelines set forth in this manual and in conjunction with the association's legal counsel. The mandatory arbitration guidelines below have been developed by NAR and must be followed by each association in their development of their arbitration program in order to maintain professional liability insurance coverage for the administration of an arbitration program.
The guidelines have also been adopted to ensure the integrity of the arbitration program on a national basis. The guidelines are requisite to association participation in the NAR arbitration program. The intent of the guidelines is not to discourage or exclude associations from participating in the program, but rather, to make certain that an association's leadership, staff, and members know and understand the level of commitment and resources that are required to effectively initiate and administer an arbitration program as an ongoing service of the association.
CLICK HERE TO VIEW THE ARBITRATION/MEDIATION GUIDE
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