Most real estate transactions proceed fairly smoothly; minor disputes between the parties usually can be worked out with a little negotiation and compromise. However, consumers and REALTORS® sometimes find themselves confronted with disputes that they are unable to resolve by themselves.

Various alternatives exist for resolving disputes. One such method, which is growing rapidly in popularity, is arbitration. In fact, most real estate contracts, including those published by C.A.R., give the parties the option of agreeing up front to arbitrate disputes that might arise between them.

Arbitration is the term used to describe a form of dispute resolution that occurs outside of the court system. Basically, in arbitration the parties submit arguments and evidence to a neutral person, known as an arbitrator, who then renders a decision (which is called an “award”). Arbitration may be used to decide most types of claims, including actions for breach of contract, misrepresentation and fraud. The arbitration agreement in C.A.R. contracts, however, excludes certain matters from arbitration, including matters within the jurisdiction of a small claims, probate or bankruptcy court.