For several years, I have volunteered on http://www.allexperts.com/ in the category of "Arbitration/Mediation"
The following is a question & answer over a deposit dispute with a real estate auction in Phoenix, Az.
Real Estate Auction Nightmare
Question:
I'm a retired Realtor from Washington, now living in gold Canyon, AZ. In October I attended my first real estate auction, an REDC auction in Phx, where I bid on and entered into a purchase and sales agreement. The remaining homes in two subdivisions were auctioned by REDC the developer. I actually did a pre-inspection of 57 but decided I was only interested in two actual model homes, upgraded and ready to go. These homes were showcase homes people toured prior to selecting the floor plan they wanted so the homes were very well done with high end extras. My intention was to live in one of these modest but stylish homes.
The actual models, those used to showcase the various floor plans, sold early in the auction. I sat back waiting for a convenient time to walk out since the two models I was interested in were now sold. As I was about to leave, the auctioneer said that a previously auctioned 4 bedroom, one of the model homes, showcase homes, had returned to the auction pool due to some problem with the first bidder's credit worthiness. Bidding began anew immediately. I honestly did not have the time to go back through the auction brochure but I did know that I would love either of the 4 bedroom models. I won the bid and escrow was opened with my cashier's check for $5250.
The following day, Monday, I drove to video the home. As I checked lot numbers and addresses I realized that the 4 bedrooms were on different lots with different addresses and that I had actually bid on the 3 bedroom model. The brochure had incorrectly disclosed that Lot 50 was a 4 bedroom and the auctioneer had also referred to the property as one of the 4 bedroom Fiesta model homes (again, there were only two.)
I immediately contacted REDC. I had back and forth conversations with several people in the days that followed. Initially they argued that I should have done "my due diligence" and that I had no grounds for backing out. As I moved up the chain of command, the V.P. of Sales at REDC, called and asked if I'd be willing to switch to a 4 bedroom model home, showcase home, in another location but that had not sold at the auction. I agreed to look at it and was shown the property the next day by a salesman for the developer. He said he had heard of my situation and that he thought I was being treated unfairly. He also said that the broker, his boss, "would not do the right thing by me unless made to do the right thing" (he has since resigned.) I went home and agreed to the trade. The V.P. of Sales was encouraged and he told me that he was advising the developer to make the trade. I was very relieved until he called two days later to inform me that the developer would not do the trade after all.
Currently my $5250 sits in escrow. The developer will not respond to any of my correspondence. A lawyer from pre-paid legal, wrote them on my behalf and that letter was also ignored. The contract stipulates binding arbitration as a remedy in case of a contractual dispute but I have no idea how that process happens. The pre-paid legal attorney suggested I sue rather than go the arbitration route. But I can't justify spending $5000 to retrieve my $5000 earnest money deposit.
It's inconceivable to me that I somehow should have known that Lot 50 was not a 3 bedroom and that the brochure was in error as was the auctioneer. After all, neither developer nor REDC caught the mistake prior to the auction. Had the home I bid on been the actual 4 bedroom model offered, I would have gladly closed on the house. Please give me your take on this situation. I'm at a loss as to how to proceed.
Answer:
04/11/2008Patricia- First of all, I'm sorry for your real estate auction nightmare.
As a "Neutral" Mediator, I do not takes sides or positions.
My practice is in California and the standard language would be in a dispute that the parties would "Mediate" and the second phase would be arbitration, if both parties had agreed in the contract.
You may want to take a close look at your contract and see if a "Mediation" clause is built into the contract.You may also want to contact the local Superior Court in Phoenix as your case may be heard in small claims. Often there is a limit as in California its $7,500. If this was the case in Arizona this could possibly cover the deposit of $5,250.
As you mentioned you have used pre-paid legal and have not had a response, and the cost of Arbitration and the risk of binding arbitration, must also be weighed.
Mediation can be cost effective for all parties, and you may want to explore this with the developer.
Often in larger cities there are community based mediation programs, there may be also mediation through the courts or perhaps mediation could occur with a private mediator.
A good source for a private mediator would be to go to http://www.mediate.com and look under Phoenix and real estate Mediation has a specialty.
More than likely your deposit funds will stay in escrow until the dispute is resolved.
Perhaps a face to face meeting with the developer can be of value, explore the "small Claims" path and attempt to mediate prior to arbitration.Litigation may not be in the best interest of all parties.
I wish you the best and please keep me posted. Happy Retirement
Respectfully
Jim W Hildreth-Mediator
www.RealEstateMediation.org
Friday, April 11, 2008
Tuesday, April 8, 2008
Amador County Superior Court Appoints Mediation Panel
April 8 2008 by Jim W Hildreth
Jim W Hildreth Mediator has been selected to a new Civil Mediation Panel by the Superior Court of the State of California and County of Amador.
The county seat is the city of Jackson.
Many Superior Courts are adopting Civil Mediation Panels and the County of Marin, North of San Francisco has a successful program with a high degree of settlements.
Jim W Hildreth focus is on issues involving real property or real estate.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
Thursday, April 3, 2008
Real Estate Mediation
Real Estate Mediation by Jim W Hildreth April 3 2008I'm often asked what is "Real Estate Mediation"?
Mediation is the process in which a neutral person- the mediator- helps parties in a dispute reach a settlement by opening lines of communications, objectively evaluating the case, identifying the parties real needs and finding a solution to address those needs.
Our Mediating services offer services to buyers, sellers, agents & brokerages.
Our goal is to offer to all parties Compassion-Leadership- and reach for Consesus.
JimHildreth-Mediator
http://www.realestatemediation.org/
JimHildreth@RealEstateMediation.org
Wednesday, April 2, 2008
Finding Problems, Finding Faults
By Joannie Cleaver, Journal Sentinel, Milwakee March 2008
It took three years for Milwaukee schoolteacher Antoine Gee to tidy his credit scores to qualify for a mortgage; eight months for him to find the brick ranch he bought in November; and one day to discover that the supposedly solid garage had a rotting foundation.
On a recent freezing day, moisture seeped through the black-painted concrete blocks that support the vermin-chewed wood frame. Last fall, Gee says, puddles crept over the cracked concrete, even in dry weather.
And don't get him going about the huge rats' nests he found between the beams and the cost and hassle of driving out the infestation.
"There's a lot they didn't disclose," says Gee of the buyers. The property condition report - a state-mandated list of known problems that sellers are required to give buyers - didn't mention any of the problems, he adds.
Even the home inspector he hired says he's never seen anything like it.
The garage was full of debris and wood-shop equipment on the day that Dan Rouse inspected it. Operating as Complete Inspection Service, he has been a home inspector for 12 years.
The sellers had their fingers crossed that the clutter would cover up the problems, he thinks. "They probably knew something was wrong," he says.
buyers vs. sellers
As the housing market stumbles through the first quarter, tensions are growing between buyers and sellers.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
It took three years for Milwaukee schoolteacher Antoine Gee to tidy his credit scores to qualify for a mortgage; eight months for him to find the brick ranch he bought in November; and one day to discover that the supposedly solid garage had a rotting foundation.
On a recent freezing day, moisture seeped through the black-painted concrete blocks that support the vermin-chewed wood frame. Last fall, Gee says, puddles crept over the cracked concrete, even in dry weather.
And don't get him going about the huge rats' nests he found between the beams and the cost and hassle of driving out the infestation.
"There's a lot they didn't disclose," says Gee of the buyers. The property condition report - a state-mandated list of known problems that sellers are required to give buyers - didn't mention any of the problems, he adds.
Even the home inspector he hired says he's never seen anything like it.
The garage was full of debris and wood-shop equipment on the day that Dan Rouse inspected it. Operating as Complete Inspection Service, he has been a home inspector for 12 years.
The sellers had their fingers crossed that the clutter would cover up the problems, he thinks. "They probably knew something was wrong," he says.
buyers vs. sellers
As the housing market stumbles through the first quarter, tensions are growing between buyers and sellers.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
Tuesday, April 1, 2008
Non-Disclosure Issues- Potential Litigation
This Old House by Jim W Hildreth April 1 2008
The Old House sits at the top of the hill, affording good views of the Mother Lode Community of Sonora, CA a Gold Rush City.
The home is for sale and access to the home is parking on the city street and climbing rows of stairs.
A potential buyer made an appointment to preview the home with a Buyers Broker.
The first words from the buyer was "the
retaining wall that supports the parcel of land is slipping"
Upon further inspection the wall extended 8" from its original support and is sloping towards the city street.
With potential heavy rains, the potential for a wall collapse is evident.
The buyers Broker asked the listing Broker of any disclosures and the response was the agent had never noticed the buckled wall.
California civil code 2079 make it very clear that on one to four residential property include a
visual inspection to observe conditions which might affect the market value of the property and then entering those observation on Property (Transfer) Disclosure Statement.
The Buyers Broker would have the same obligations.
If the agents missed these disclosures, a future disaster for liability exposure would go beyond the potential collapsed retaining wall.
It is the wise agent, who will make a visual inspection and disclose.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
(209) 536-1103
The Old House sits at the top of the hill, affording good views of the Mother Lode Community of Sonora, CA a Gold Rush City.
The home is for sale and access to the home is parking on the city street and climbing rows of stairs.
A potential buyer made an appointment to preview the home with a Buyers Broker.
The first words from the buyer was "the
retaining wall that supports the parcel of land is slipping"
Upon further inspection the wall extended 8" from its original support and is sloping towards the city street.
With potential heavy rains, the potential for a wall collapse is evident.
The buyers Broker asked the listing Broker of any disclosures and the response was the agent had never noticed the buckled wall.
California civil code 2079 make it very clear that on one to four residential property include a
visual inspection to observe conditions which might affect the market value of the property and then entering those observation on Property (Transfer) Disclosure Statement.
The Buyers Broker would have the same obligations.
If the agents missed these disclosures, a future disaster for liability exposure would go beyond the potential collapsed retaining wall.
It is the wise agent, who will make a visual inspection and disclose.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
(209) 536-1103
A Diability and a Dispute
A Disability, and a Dispute
By JOSH BARBANEL NY Times
March 30, 2008
THE first thing that Barbara Gutmacher Girard asked about before signing a contract two years ago to buy a condominium at the Plaza Hotel was access for the handicapped, she recalled last week.
The question stems from a dispute that developed after Ms. Girard and her elderly mother, Rose Gutmacher, leased adjoining suites, for a total of $37,500 a month, at the Waldorf-Astoria Towers, the exclusive upper floors of the famed hotel on Park Avenue at 49th Street.
After moving in, in November 2003, the women found themselves caught up in disputes with the hotel management. The hotel had offered them a long-term lease in the tower but then abruptly withdrew the offer, raising the rent to $63,690 a month. The hotel asserted that Ms. Girard’s mother, who uses a wheelchair, created problems by repeatedly calling guest services for help in locating her daughter or a health aide, according to press accounts at the time.
They moved a few blocks away to the Towers, at the New York Palace Hotel, on Madison Avenue near 50th Street. In January 2005, they filed an $8 million discrimination lawsuit against the Waldorf, claiming violations of laws protecting the disabled.
In late February, a settlement was reached. The terms were confidential, and Ms. Girard’s lawyer, Marshal B. Bellovin, declined to discuss them, as did officials at the Waldorf.
But a handwritten stipulation in the court file indicated that though there was no finding of fault, the Waldorf agreed to pay $15,000 to a charity, the International Committee Against Mental Illness. In addition, the hotel agreed to install a curb cut near an entrance to the Waldorf on East 50th Street, and to inspect a ramp to make sure that it “supports an individual seated in a wheelchair” and that it “does not sway from side to side.”
A year after the suit was filed, Ms. Girard signed a contract on a condominium at the Plaza, which is on Fifth Avenue at the foot of Central Park. A couple of weeks after the suit was settled, she closed on a sprawling 1,760-square-foot two-bedroom on the 18th floor. The price was $4.7 million, according to property records filed last week.
But Ms. Girard said in a recent interview that in the last two years, she and her mother had become so comfortable at the New York Palace that they had not yet decided when and if they were going to move into their new condo.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
By JOSH BARBANEL NY Times
March 30, 2008
THE first thing that Barbara Gutmacher Girard asked about before signing a contract two years ago to buy a condominium at the Plaza Hotel was access for the handicapped, she recalled last week.
The question stems from a dispute that developed after Ms. Girard and her elderly mother, Rose Gutmacher, leased adjoining suites, for a total of $37,500 a month, at the Waldorf-Astoria Towers, the exclusive upper floors of the famed hotel on Park Avenue at 49th Street.
After moving in, in November 2003, the women found themselves caught up in disputes with the hotel management. The hotel had offered them a long-term lease in the tower but then abruptly withdrew the offer, raising the rent to $63,690 a month. The hotel asserted that Ms. Girard’s mother, who uses a wheelchair, created problems by repeatedly calling guest services for help in locating her daughter or a health aide, according to press accounts at the time.
They moved a few blocks away to the Towers, at the New York Palace Hotel, on Madison Avenue near 50th Street. In January 2005, they filed an $8 million discrimination lawsuit against the Waldorf, claiming violations of laws protecting the disabled.
In late February, a settlement was reached. The terms were confidential, and Ms. Girard’s lawyer, Marshal B. Bellovin, declined to discuss them, as did officials at the Waldorf.
But a handwritten stipulation in the court file indicated that though there was no finding of fault, the Waldorf agreed to pay $15,000 to a charity, the International Committee Against Mental Illness. In addition, the hotel agreed to install a curb cut near an entrance to the Waldorf on East 50th Street, and to inspect a ramp to make sure that it “supports an individual seated in a wheelchair” and that it “does not sway from side to side.”
A year after the suit was filed, Ms. Girard signed a contract on a condominium at the Plaza, which is on Fifth Avenue at the foot of Central Park. A couple of weeks after the suit was settled, she closed on a sprawling 1,760-square-foot two-bedroom on the 18th floor. The price was $4.7 million, according to property records filed last week.
But Ms. Girard said in a recent interview that in the last two years, she and her mother had become so comfortable at the New York Palace that they had not yet decided when and if they were going to move into their new condo.
Jim W Hildreth-Mediator
www.RealEstateMediation.org
Monday, March 31, 2008
Mediation Florida Homowners Associations
Mediation Requirement Streamlined for Florida Homeowners Associations
Statutory changes in Florida have streamlined the mediation process required prior to litigation of certain disputes between homeowners and members. The aggrieved party now can contact the other party directly with a written offer to mediate as set forth in the statute and propose a choice of five certified mediators. Seeking mediation in this way tolls the statute of limitations. If the dispute goes on to litigation or arbitration, attorneys’ fees incurred in the mediation may be recovered by the prevailing party. But those who do not participate in the entire mediation process may not recover any attorneys’ fees or costs.
The News-Press (February 28, 2008); Fla. Stat. § 720.311
Jim W Hildreth-Mediator
www.RealEstateMediation.org
Statutory changes in Florida have streamlined the mediation process required prior to litigation of certain disputes between homeowners and members. The aggrieved party now can contact the other party directly with a written offer to mediate as set forth in the statute and propose a choice of five certified mediators. Seeking mediation in this way tolls the statute of limitations. If the dispute goes on to litigation or arbitration, attorneys’ fees incurred in the mediation may be recovered by the prevailing party. But those who do not participate in the entire mediation process may not recover any attorneys’ fees or costs.
The News-Press (February 28, 2008); Fla. Stat. § 720.311
Jim W Hildreth-Mediator
www.RealEstateMediation.org
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