Friday, June 29, 2018

Dispute Resolution between Brokers

Image Attribution: www.opndoor.com
Akin to the wild, wild, west, commercial real estate agents are sometimes referred to as cowboys - I'm not certain why - but we are. Maybe it's our entrepreneurial spirit, our freewheeling demeanor, work hard - play hard attitude, or the way in which "we eat what we catch" - a phase associated with commissioned sales professionals.

Regardless, we cowboys sometimes disagree - about a lot of things but most commonly about how we are paid. Fortunately, as commercial brokers, our differences are not settled by squaring apart ten paces at sundown.

When a dispute arises - between agents - we have ways to resolve our complaints - dispute resolution - which is the topic of today's post.

Single biggest on the topic of disputes would be a fee disagreement. My general rule - fee squabbles are easiest avoided by having a clear written understanding at the front end of a deal. Also, transacting with honorable practitioners lessens the risk of a misunderstanding. If there are listings, offers, responses, leases, escrow documents and the like - written agreements are easy. If not, you may find yourself with a problem.

As previously discussed, commercial agents are generally not members of the California Association of Realtors - some certainly are, but typically no. Therefore, we are not Realtors and not subject to the mandatory arbitration and mediation - between agents - as called out in C.A.R. affiliation. However, most commercial brokers are members of the Association of Industrial Commercial Real Estate - AIR CRE. AIR CRE gives agents a platform to settle disputes through mediation, or arbitration.

Commonly, the office in which an agent resides also has - through their independent contractor's agreement - some means of mediating or arbitrating fee fights.

So moving up the DefCon ladder - from least to worst:
First, Professionals would first try to work out their differences among themselves - DefCon - 5
If no resolution can be reached, the issue would be discussed interoffice or intraoffice with managers  - DefCon - 4
Still, no meeting of the minds, a mediation with a single arbitrator would be conducted to smooth the ruffled feathers - DefCon 3
A room full of crossed arms and clenched jaws results in binding arbitration - DefCon 2
Finally, the parties lawyer up and seek to litigate the issue in a court of law - DefCon 1 - today's version of the OK Corral!

In my experience, disputes rarely see the light of day - that of a mediation or arbitration - or worse - a lawsuit. Hands are generally shaken in the privacy of an agent's office.