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The Difference Between Arbitration and Mediation

mediation vs arbitrationBoth arbitration and mediation are faster, and typically much less expensive, ways of resolving real-estate and other disputes than going to court. But the two are very different, and there are pros and cons for each. Here is a short primer on the two approaches.

Arbitration

Here the parties submit evidence to the arbitrator, a neutral person who hears all the evidence presented by each party and then renders a binding decision. (If the amount in dispute is small, parties generally advocate for themselves without hiring an attorney.) Both parties must agree in advance to abide by the arbitrator’s finding–something that is sometimes even written into a contract before there ever was a dispute. (Only a few standard real estate contracts contain this clause, although it’s common in contracts between individuals and businesses in some industries.) Arbitration is typically conducted outside of the court system, typically in the offices of the arbitrator. The arbitrator is selected by both parties and the fee is generally shared by each. Because an arbitrator’s ruling cannot be appealed, problems are resolved much more quickly than with a lawsuit.

Mediation

Mediation is an effort to reach an agreement that satisfies both parties. It is a non-adversarial process, where each party (typically in separate rooms) speaks in confidence to the mediator, who tries to help the parties reach their own resolution to the dispute. In some fields, like divorce, the court requires that mediation be undertaken early in the process; other times mediation is done outside the court system in a mediator’s office. Unlike arbitration, mediation does not result in a binding decision unless a mutually satisfying agreement is reached by the parties; if not, they can still go to litigation. For this reason there is little downside to attempting a resolution via mediation. As with arbitration, the mediator’s fees are generally split by the parties.

The Law Office of Gary Landau offers both mediation and arbitration. Click here to learn more.  Call the office at 954-979-6566 for a FREE consultation. Certified mediator and longtime arbitrator Gary Landau personally returns all calls to him.

Can wills prepared in another state or country be used in a Florida probate proceeding?

Last WillOften people die either residents of another state or country and own real estate in Florida or they moved to Florida but never changed their foreign will to a Florida will. The question is: Can these wills be used in a Florida probate proceeding after death? In Florida a will must be in writing signed by the Testator (the person whose will it is) in front of 2 witnesses who must sign their names after the Testator.

Generally, if a will is valid in the state or country where the decedent resided at the time the will was executed, than the will be admissible in Florida (with the exception of the holographic will see below). It’s helpful to get an affidavit from a licensed attorney from that jurisdiction to present to the Florida Court that the will seeking to be admitted was validly executed in the originating state.

A holographic will from another state (a handwritten will that was signed by the Testator) will not be accepted in Florida if it doesn’t have the 2 witness requirement even if it is valid in the state where it was executed.

 

Ask Gary Landau

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Question: I am selling my house “as is.” The buyers hired an inspector who found all kinds of needed repairs. Do I have to make them?

Answer: A typical “as is” contract gives buyers the right to hire an inspector who must perform his inspection within a certain number of days from the contract’s signing. (You must still disclose to the buyers major defects you know about before the contract is even signed.) It also allows the buyers to back out of the deal by sending the seller notice in writing within a short period if they are unhappy with what the inspector discovers. So if your contract defined the sale as “as is,” you are not legally obligated to make the repairs. However, if the buyers feel there are too many fixes needed for them to go forward, you may want to renegotiate the terms of the contract. You could agree, for example, to make some of the repairs or to credit the buyer for having to make them after closing. Or you could decide to hold your ground, letting the buyers choose if they want the house in this condition. Although “as is” contracts have become quite popular in South Florida strong seller’s market of the past year, as the tide shifts more to buyers we may see a return to “repair clauses,” where sellers agree to fix flagged items up to a certain percent of the sales price, typically two percent.

Question: My mother is elderly and owns her own home. Can I get a document to sell her house later if she becomes ill?

Answer: If your mother agrees that she would like to give you the authority to take care of her legal affairs when she can no longer do so, a lawyer can draft a power of attorney with specific language that will enable you to later sell her home. Be sure the lawyer knows exactly what your mother wants to do because not all powers of attorney would allow you to handle all parts of a real estate sale.

Question: I was looking over the deed to my house and noticed it has my social security number on it. Isn’t this available for anyone to see?

Answer: Absolutely. In this age of identity theft, it is critical that your social security number not remain on the recorded version of this document, which is easily available to anyone online. A 2002 law prohibited closing agents from putting the number on newer documents. But if you have an older deed, I recommend that you check that deed at the county records website (in Broward, it is Broward.org/records). If you find your social security number is listed, you can download a request form and send it to the county recorder who will have the number removed at no fee.

More of Your Real Estate Questions Answered

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Question: My mortgage broker tells me there are many mortgage options. How do I know which to choose?

Answer: In recent years there has been an explosion in the number of mortgage types available. You must work with a lender or mortgage broker to determine the loan that is best for you; however, there are some general pointers to keep in mind. Loans come in many varieties: fixed rates (for 15, 30 or sometimes now 40 years) or adjustable, where the rate is often low for a few years then can change, going up or down. If you choose an adjustable loan, be sure that you can afford to make payments if the interest rate rises. One popular loan these days is the interest-only loan, where you defer payment of your principal for a set period of time. Do know, however, that when that period expires, you typically will pay both the regular and the deferred principal, upping your monthly fee substantially. Some lenders tell you you do not need to put up any money to get the loan; this may be true, but in my experience, underwriters sometimes balk at these deals, and your closing could be in jeopardy, which is why I often tell my seller clients to beware of buyers with little cash. Watch, too, for prepayment penalties in your prospective loan; if you have one and refinance your home (and in some cases, even sell it), you will have to pay a hefty surcharge to the lender. Finally, lenders vary widely in their fees and closing costs. Ask any lender for a “good faith estimate” before you sign on, which will document their expected charges.

Question: My wife and I moved to Florida and bought a home in November. I heard we are eligible for a Homestead exemption. How do we get one?

Answer: Homestead exemptions are a reduction in your property taxes for a primary residence. If you bought your home in 2013, you must file for an exemption by March 1, 2014. To qualify, you will need a Florida driver’s license with your new address, plus other documents. For details, check out the Broward County Property Appraiser’s office at bcpa.net. You can also call them at 954-357-6830, but it is often difficult to get through.

Question: I fell behind in my maintenance payments and found a person willing to lend me the money in a complex transaction. Now that person says he owns my house. I think I have been the victim of a scam.

Answer: There are a number of scams out there that homeowners must be wary of, or you can indeed lose your house even if you owe only a relatively small amount of money. In one scam, the “lender” agrees to pay your back maintenance and current monthly mortgage and fees for a certain time-period if you write the monthly check to them by a specific date each month. Miss that date even by a minute, and they take the title to your house that they are holding as collateral for the loan. If you are indeed behind on your monthly maintenance payments, try to work out a plan with your association or contact only a reputable lender.

Real Estate Questions Answered by Gary Landau

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Question: My real estate agent is urging me to use the title company she recommends. Is there a benefit – or a risk – in doing so?

Answer:  Sometimes real estate agents push buyers to use a specific title company to handle the closing. Buyers often don’t know that many of these title companies are actually owned by or have a financial relationship with the Realtor’s office. A recent article in Money magazine reported that buyers often pay more for their closing than they have to, because they go with the company recommended by the Realtor without shopping around. The firms of these real estate agents “frequently get a cut of premiums,” the article warns. Money’s advice: “Don’t just use your broker’s in-house title agent…who has little incentive to compete on price (and may get undisclosed commissions).” Know, too, that in Florida, buyers have the choice between using a title company or an attorney who writes title.  While both can handle the paperwork and create a title policy, only an attorney represents your interests in the deal.

Question: I want to add my son to my deed so when I die he will already have the condo. Are there any implications that I am not aware of?

Answer: Putting a child on your deed can be a good form of estate planning – one that I do sometimes recommend to my clients. But there are some things you need to be aware of: First, you need to check the documents of your condo association. Although many exempt immediate family members, others require that anyone added to the deed go through an approval process – which requires time and money. Second, be aware that any financial judgments against your son, now or in the future, can become a lien on your condo, and that later, should you decide to sell, he will likely need to sign all documents. (If he is skiing in Switzerland, that could hold up your closing.) If you do add him, one probate avoidance way is to add him as “a joint tenant with rights of survivorship.” That way the condo will automatically go to him upon your death as you desire.

Question:  I have an adjustable rate mortgage. Should I consider refinancing to a fixed rate?

Answer: This is an individual decision, but in these times when fixed rate mortgages aren’t carrying much higher rates than adjustables (known as ARMs), it may be worth looking into, especially if you plan to stay in your home for at least a few years and your loan rate has already or will soon start adjusting upward. Crunch the numbers to see if it makes sense for you at Bankrate.com. Be sure to shop around for the best loan terms, and also for the attorney or closing agent who will handle the closing.