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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.