What is arbitration in real estate?

What is arbitration in real estate?


Arbitration in real estate is a method of resolving disputes between parties involved in real estate transactions without going to court. It is a form of alternative dispute resolution that offers a more streamlined and efficient process compared to traditional litigation. In this article, we will explore what arbitration in real estate entails, its benefits, and how it differs from other dispute resolution methods.

What is Arbitration in Real Estate?

Arbitration is a process where a neutral third party, known as an arbitrator, is appointed to hear and decide on a dispute between two or more parties. In the context of real estate, arbitration can be used to resolve various types of conflicts, including contract disputes, construction defects, landlord-tenant disputes, and disagreements between buyers and sellers.

Unlike litigation, where disputes are resolved through the court system, arbitration provides a more flexible and private method of resolving conflicts. The arbitrator’s decision, known as an award, is typically binding on the parties involved, meaning they must abide by the decision reached.

Benefits of Arbitration in Real Estate

Arbitration offers several advantages in the real estate industry. Firstly, it provides a faster resolution compared to litigation. Court cases can often take months or even years to reach a final judgment, whereas arbitration proceedings are typically completed within a shorter timeframe. This speed can be particularly beneficial in real estate transactions where time is of the essence.

Secondly, arbitration allows the parties involved to have more control over the process. Unlike court cases, where the judge’s decision is final, arbitration allows the parties to select the arbitrator, agree on the rules and procedures, and even choose the location of the arbitration. This flexibility enables the parties to tailor the process to their specific needs and preferences.

Another advantage of arbitration is its confidentiality. Court proceedings are generally open to the public, but arbitration offers a more private setting. This can be particularly important in real estate disputes where sensitive information, such as financial details or trade secrets, may be involved. Confidentiality helps protect the parties’ privacy and allows for a more open and candid exchange of information.

Arbitration vs. Mediation and Litigation

While arbitration shares some similarities with mediation and litigation, it has distinct characteristics that set it apart. Mediation is another form of alternative dispute resolution, but unlike arbitration, it is a non-binding process. In mediation, a neutral third party, known as a mediator, facilitates negotiations between the parties to help them reach a mutually acceptable resolution. The mediator does not make a decision but instead assists the parties in finding a compromise.

Litigation, on the other hand, involves resolving disputes through the court system. It is a formal and adversarial process where the parties present their cases to a judge or jury, who then makes a final decision. Litigation can be time-consuming, expensive, and often lacks the flexibility and privacy offered by arbitration.


Arbitration in real estate provides an efficient and effective means of resolving disputes without resorting to litigation. It offers benefits such as speed, control over the process, and confidentiality. By understanding the advantages of arbitration and how it differs from mediation and litigation, parties involved in real estate transactions can make informed decisions when it comes to resolving conflicts.


– National Association of Realtors: www.nar.realtor
– American Arbitration Association: www.adr.org
– Cornell Law School Legal Information Institute: www.law.cornell.edu