Disputes are unfortunately, and all too commonly a part of real estate transactions. It is worth keeping in mind, however, that in the overwhelming majority of transactions the disputes are minor and the parties do not resort to formal dispute resolution processes. That is not, however, to say that disputes are not important or can be ignored. Quite the contrary is true. A smart agent will be alert to the potential for disputes and strive to resolve them before they become serious enough to threaten the transaction or create liability.
Real estate transactions generate two kinds of disputes. The first is disputes between the parties. Such disputes are deal killers and lawsuit generators. They can also result in the second type of dispute: disputes that involve agents. A dispute between the parties means negotiating a business solution if possible. If not, it means advising your client to seek legal advice. A dispute involving agents means self-preservation.
Disputes involving agents are dangerous and stressful. Early principal broker involvement is absolutely critical at the first sign of a dispute that involves you as an agent. Because the broker is not personally involved with the client, they may be able to provide a more objective risk assessment. When clients stop fighting among themselves and start to point a finger at you, protecting your license needs to be foremost in your mind. That means getting your principal broker involved immediately.
Disputes between the parties to a real estate transaction come in two types: Those that arise before closing and those that arise after closing. Disputes that arise before closing generally fall into two categories. One is disputes involving unanticipated circumstances. The other is disputes involving the terms of the contract. These are, of course, not mutually exclusive categories. An unanticipated circumstance can lead to a dispute about the terms of the contract. For instance, finding a roof leak can lead to a dispute about the operation of the inspection clause.
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