Dispute Resolution – Liquidated Damages & Arbitration
Dispute Resolution – Mediation, Liquidated Damages & Arbitration
- Agents are not allowed to give “legal” advice.
- Agents may refer to the SBSA [Statewide Buyer & Seller Advisory] which has several paragraphs regarding Liquidated Damages, Mediation and Arbitration in the contract.
- Agent may say: “Generally RPA paragraph 21.B. and 22.B. are initialed by both Buyer & Seller.”
- If client wants more detailed information, you can print out the CAR Legal Q & A [see link at bottom of this page.]
LIQUIDATED DAMAGES [RPA Paragaph 21.B]
- Buyer and Seller are advised that a liquidated damages clause is a provision Buyer and Seller can use to agree in advance to the amount of damages that a seller will receive if a buyer breaches the Agreement.
- The clause usually provides that a seller will retain a buyer’s initial deposit paid if a buyer breaches the agreement, and generally must be separately initialed by both parties and meet other statutory requirements to be enforceable.
- For any additional deposits to be covered by the liquidated damages clause, there generally must be another separately signed or initialed agreement (see C.A.R. Form RID – Receipt for Increased Deposit).
- Buyers and Sellers must decide on their own, or with the advice of legal counsel, whether to agree to a liquidated damages clause.
- Brokers do not have expertise in this area.
MEDIATION [RPA Paragraph 22.A] This is not an option, but is automatically included in the contract.
- Buyer and Seller are advised that mediation is a process by which the parties hire a neutral person to facilitate discussion and negotiation between the parties with the goal of helping them reach a settlement of their dispute.
ARBITRATION [RPA Paragraph 22.B]
- Buyer and Seller are advised that arbitration is a process by which the disputing parties hire a neutral person to render a binding decision.
- Buyers and Sellers must decide on their own, or with the advice of legal counsel, whether to agree to arbitration.
- Brokers do not have expertise in this area.