When working with an escrow services company to facilitate the purchase or sale of a property, it’s important to decide how disputes will be handled should they develop during the process. If you don’t outline these steps ahead of time, there’s no guarantee the other side will agree to a specific dispute resolution method later on. Three common forms of dispute resolution that are typically outlined when entering an escrow agreement include:
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Mediation - Mediation brings a neutral third party into the equation to help facilitate the resolution of any issue. They will go back and forth with both sides and gently try to get each side to work towards an agreement. It’s easier for a neutral third party to hear from both sides and come up with a resolution plan than for the two sides to directly hash out a disagreement, which is why mediation is oftentimes the first line of conflict resolution during a commercial sale. Mediation is purely a recommendation and must be agreed upon by both sides
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Non-Binding Arbitration - A non-binding arbitration resolution is very similar to mediation, except that the neutral third party won’t be going back and forth between both sides and working to develop an agreement that works for both parties. Instead, both sides will make their case before the arbitrator, who will then render a decision. However, because it is non-binding, there is no guarantee that either party will accept the terms of the ruling, which can end up rendering this process ineffective. That said, a non-binding arbitration ruling oftentimes suggests how a binding arbitration hearing would likely be decided, so agreeing to this non-binding ruling can save both sides time and money.
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Binding Arbitration - The final form of escrow resolution is a binding arbitration agreement, which as you can probably sort out, is exactly like the above process, only the decision rendered by the arbitration agent is considered final. You will not have recourse if you do not like the decision that is made by the neutral arbitrator if you pursue a binding arbitration agreement. Knowing that disputes will be handled with a binding agreement can move the process along quicker, as the other side cannot simply ignore the recommendation, as is the case with the first two forms of escrow resolution.
Contact The Experts at Commercial Partners Title
Contact the experts at Commercial Partners Title Company today to get help with your next commercial real estate transaction. We have been providing commercial title services to clients for decades and have garnered a reputation as being experts in the industry. Whether you need commercial title insurance, escrow services, construction disbursement assistance, or help with the closing of your transaction – we have the skills and resources you need. Contact us today at our Minneapolis office to learn more about our services and see how we can help you through the details of your next commercial real estate deal.