Real Estate Tip
for Home Buyers and Sellers
Don't sign the
optional arbitration agreement in the Purchase Agreement.
Purchase Agreement form used by realtors in Minnesota contains
an optional arbitration agreement. By signing this you
give up your right to sue the other party in court.
Arbitration will cost you more money than Conciliation (small
claims) Court. Public Citizen, a consumer advocate
group, reported that the forum costs charged by arbitration
services can be up to five thousand percent higher
than the cost to initiate a court case. http://www.citizen.org/publications/release.cfm?ID=7173.
a case under a mandatory arbitration agreement signed before there was a
dispute were significantly higher than the costs to arbitrate
a dispute under an agreement entered into after the dispute
If a dispute does arise and your claim is less than the $7,500
Conciliation Court limit, you would be better off using
Conciliation Court to resolve the problem than
arbitration. In Conciliation Court, you don't need a
lawyer to represent you and the filing fee will be much less
than what you would be charged in arbitration.
If you have a claim that's greater than $7,500, you and the
other party can choose at that point to use arbitration or
mediation to resolve the matter. At any rate, even if
you choose to sue the other party in district court, the court
will require you to go through some form of arbitration,
mediation or other alternate dispute resolution.
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