Arbitration is an optional agreement for resolving disputes about non-disclosure of physical conditions in the home that may arise after closing. It is designed to be a more efficient, less costly legal dispute process for claims over $15,000 but it is impossible to predict how arbitration would impact you in a future legal dispute. It is designed to set ground rules for resolving a legal dispute separate from the court system.
You have the option to either sign or decline to sign an Arbitration Disclosure and Residential Real Property Arbitration Agreement as part of coming to an agreement on the purchase of a home in Minnesota. If all parties sign, you agree to arbitrate claims over $15,000. Claims under $15,000 go to small claims court.
Here is a comparison of options for resolving disputes after closing.
DISTRICT COURT
- For any amount of claim (typically $15,000 or more)
- Filing fees (all fees)Â $$-$$$
- Time consuming (6-12 months of discovery) $$$
- Most likely to settle/least likely to actually go to trial
- Attorneys are basically required
- Hearings/trial in the Courthouse
- Appeals are possible, but not common and costly
SMALL CLAIMS COURT
- Only claims under $15,000
- Filing fee $
- Least time consuming (no discovery) $
- Attorneys are optional
- Self-representation is ok
- Trial in the Courthouse or via Zoom
- Appeal of decision is a re-do in District Court
ARBITRATION
- Only for claims over $15,000
- Filing fee $$
- Low to medium expensive/time consuming (some discovery allowed) $$
- Attorneys are optional
- Self-representation is ok
- Trial often held in the home
- Decision is final (no appeal)
Want more information?
- Here is a link to a 20-page Guide to Residential Real Property Arbitration with detailed information including a fee schedule and questions/answers.
- Realtors are not lawyers so cannot give legal advice. You can consult with your attorney to help you decide whether or not to sign the arbitration agreement.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
