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What might be the true cost of arbitration

By: Joe Farsetta

Arbitration is an alternate means of dispute resolution, which in theory expedites the process, helps clear the court calendar, and helps plaintiff and defendant avoid the costs associated with a trial. But, what happens when the decision of the arbiter is just plain wrong in your opinion? What if he erred in his assessment? What recourse do you have? That depends on if the arbitration was binding or not. In binding arbitration, there is typically little recourse for the losing party.
 

In non-binding arbitration, things can be different. While some believe that non-binding arbitration is a waste of time and money, from my perspective it is not. If the cost of arbitration is reasonable, and produces a product (not necessarily result) which is beneficial, it has served its purpose. In many cases, non-binding arbitration as the next effect of its binding counterpart.

First of all, if the costs are reasonable and proportional, the clauses compelling arbitration may not be deemed onerous. Secondly, if the result of the arbitration is not necessarily final, the process may not be deemed as oppressive. As to the notion of the process being a waste of time, I couldn’t disagree more. Think of the process as a sort of mock trial. In the worst case, the results of the arbitration decision, along with all presented in the evidentiary phase are returned to both sides. If priced correctly, it is like cheap discovery. At the middle of the road, each party gets to see how strong or weak a case they are really presenting. In the best of scenarios, if appealed to the courts for trial (as it is non-binding), a judge may accept the documentation and decision of the arbiter when considering the merits of the case.

All these concepts are key when considering disputes regarding allegations of defective home inspections. When a home inspector is accused of negligence, the most common recourse is a conventional lawsuit. While some attorneys may proceed on a contingency basis, other may not. In fact, for the plaintiff, there is typically some capital outlay. Even where they think they have a strong case, they may discover that they do not a few thousand dollars into the proceeding, and most often after discovery. For the inspector, the costs of defending one’s position may be costly from the get-go. So what’s a happy medium? Mediation and Arbitration. Inspection Arbitration, more specifically.

Some arbitration services offer a sliding scale of fees, based on the value of the case. Others have rather high fees associated with a case, at fixed prices. Most offer only binding arbitration. A majority do not specialize in inspection-related cases.

Inspection Arbitration Services is a bit different, in that it offers low-cost, fixed-rate mediation and arbitration services for inspection disputes exclusively. Our neutrals are contract, construction, and inspection industry experts. Inspection related disputes are the only cases we consider. Administrative fees are paid for out of subscription fees which inspectors pay up front for. In other words, if one does not subscribe in advance, they cannot take advantage of the low cost and experience level that the service has to offer.
Potential homebuyers can also subscribe in advance of having an inspection, and compel the inspector to bring disputes to the service first, though this would be quite a rarity.

The service is not association-based, and is available to all residential and commercial inspectors regardless of association status. Neutrals are not exclusively from the inspection profession, and include construction experts, real estate attorneys, inspection professionals, and construction contract specialists.



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What might be the true cost of arbitration

By: Joe Farsetta
   
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