Arbitration

In Minnesota you have the option to choose, at the time your write your Purchase Agreement, whether to have any future disputes about the physical condition of the property you are buying decided by binding arbitration or by a court of law.

You give up your right to go to court

When both buyer and seller agree to binding arbitration you give up your right to go to court, and agree to resolve disputes by using binding arbitration under the Residential Real Property Arbitration System administered by NCDS (National Center for Dispute Settlement) and endorsed by the Minnesota Association of Realtors.

Cost and appeal

The administrative fee for the Arbitration System varies depending on the amount of the claim, but it is more than initial court filing fees. In some cases conciliation court, where $7,500 is the maximum claim, is cheaper than arbitration. In some cases, arbitration is quicker and less expensive but the right to appeal an arbitrator’s award is very limited compared to the right to appeal a court decision.

Must be filed within 24 months of closing

A request for arbitration must be filed within 24 months of the date of closing on the property.

The process

usually takes place at the home - lawyer representation optional

• A party who wants to arbitrate files a Demand, along with the appropriate administrative fee, with NCDS
• NCDS notifies the other party, who may file a response
• NCDS works with the parties to select and appoint an arbitrator to hear and decide the dispute (arbitrators have backgrounds in law, real estate, architecture, engineering, construction or other related fields)
• Arbitration hearings are usually held at the home site
• Parties are notified about the hearing at least 14 days in advance
• A party may be represented by a lawyer at the hearing if he or she gives 5 days advance notice
• Each party may present evidence
• The arbitrator must make any award within 30 days from the final hearing date

This is only a general overview of the process. For more specific information, including fees, visit NCDS online or follow their links below, call 800-777-8119 ext 509 or consult a lawyer.

• Rules and Procedures for Minnesota Real Property Disclosure Disputes (.pdf)
• Fee Schedule for Minnesota Real Property Disclosure Disputes (.pdf)
• FAQ for Minnesota Residential Real Property Arbitration (.pdf)

Reasons to use arbitration

The following are some reasons for using Alternative Dispute Resolution:

• It solves problems, rather than simply deciding the dispute
• It resolves disputes quickly, usually within weeks, rather than years
• It prevents future conflicts, as well as resolving present ones
• It emphasizes constructive relationships, rather than adversarial positions
• It allows parties to negotiate based on their interest, to understand their own needs and decide what they are willing or not willing to concede
• It is confidential, not a public proceeding or a matter of public record
• It allows those most familiar with the problem, the disputing parties, to create the solution, which ensures that the solution will work