Navigating Residential Real Estate Dispute Resolution

Purchasing a new home may come with a great deal of excitement but can also bring anxiety. Even the most careful or experienced buyers sometimes face hurdles throughout the process, especially in the unfortunate event that one party discovers the property is in a different condition than what they expected. These discoveries often come via a Sellers Property Disclosure form. Fortunately, there are well established methods of dispute resolution to resolve disagreements between buyers and sellers of homes and other real estate.

In Kentucky, both real estate associates and brokers (agents) must be licensed, and no person can operate as a real estate associate or broker without licensure under KRS 324.020. A licensed real estate agent may voluntarily join a professional organization, such as the Greater Louisville Association of Realtors (“GLAR”) to gain certain advantages or benefits which aid in practicing real estate, i.e. forms, contracts, and advertising benefits.

Additionally, when buying or selling real estate through a licensed real estate agent, the seller must disclose, to the best of their knowledge, the conditions of the listed property under KRS 324.360. This will be through a Sellers Property Disclosure form. While buyers are encouraged to arrange their own professional inspection of the property, they may choose not to. Even when they do, a seller overwhelmingly may not allow those inspections to be invasive or destructive in nature. This sometimes allows undisclosed defects to go unnoticed. These undisclosed defects can result in dissatisfaction with the residential real estate and frequently encourage buyers to pursue legal options leading to dispute resolution.

How To Handle The Situation When Disputes Escalate

If your realtor uses a GLAR residential sales contract, and all parties sign the agreement, then the transaction will be bound by the terms and conditions therein. If a dispute arises during the sale which requires further action, the terms of the sale contract will dictate how to resolve that dispute; your sale contract may contain an alternate dispute resolution clause, which is most often mediation and/or arbitration. The differences between mediation and arbitration have been discussed in a previous Strause Law Group (“SLG”) blog, found here. In short, mediation and arbitration provide opportunities to resolve disputes in a quicker, more cost-efficient manner than civil litigation, and are commonplace in real estate contracts.

For example, the GLAR has a standard residential sales contract, which has a “Mediation/Binding Arbitration” clause (which is usually Provision 26 or 27). This clause requires that any dispute or claim which is larger than the limits of the small claims court ($2,500.00) occur in mediation/arbitration rather than through the court system. The GLAR guidelines require disputes to first be mediated; notices of demand for mediation must be made within a year (365 days) of when the claim in question was discovered or should have been discovered. If the other party fails to respond after this reasonable notice, the mediator will notify the claimant and record the other party’s lack of contractual cooperation. After this, the claimant may pursue the claim in arbitration, which must occur within 365 days of when the initial Demand for Mediation was filed. The GLAR has more specific guidelines which are made available, but this demonstrates how complex dispute resolution often is under a residential real estate agreement.

Partner With Experience You Can Rely On

No matter what role you have in a residential real estate transaction, the knowledgeable attorneys at Strause Law Group have extensive experience with the home buying process in Kentucky. Our legal team has represented both buyers and sellers, and they know the mediation and arbitration processes from both sides. If you have questions or legal issues regarding a residential real estate transaction, contact Strause Law Group to schedule a consultation. When you retain our firm, you can depend on our team to handle your dispute with the utmost care and diligence. Please contact us online or at one of our three office locations to discuss your legal concerns.

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Lexington: 859-428-7029

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