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BRIEF BYTES: Question and Answer
Forum
The purpose is to answer frequently
asked or unusual questions. Topics will range from real estate,
business, litigation and trusts and estates. Your feedback
is appreciated. Direct your comments to Cherisse Roy at croy@scott-harris.com
ARBITRATION
UNDER THE FAR CONTRACT
 In
late 1997, the Fifth District Court of Appeals of the State
of Florida construed the arbitration language that is contained
in the contract prepared and approved by the Florida Association
of REALTORS (the "FAR Contract"). In the case of
Duckworth v. Plant Patricia Plant had contracted to purchase
a residence from Duckworth. Duckworth, as the seller, was
assisted by the listing broker. In particular, Duckworth was
assisted by Webb, who is described, in the complaint as an
employee of the listing real estate broker. The complaint
that was filed with the Circuit Court alleged that Webb aided
Duckworth in preparing the contract and a disclosure statement
and that both were guilty of giving misleading and incomplete
information. In particular, the complaint by the purchaser
alleged that the seller and Webb had failed to inform the
purchaser that the property had serious drainage problems.
The
seller filed a motion to dismiss the purchaser's complaint
because the purchaser failed to seek mandatory arbitration
under the terms of paragraph 16 of the FAR Contract. After
reviewing the specific language of the provision, the Court
ruled that the arbitration clause was mandatory as between
buyer and seller and, therefore, the purchaser could not prosecute
the claim in the Court but was required to arbitrate in accordance
with the arbitration provisions. The Court ruled that the
provision was a binding arbitration agreement and that Florida
Courts must enforce unambiguous arbitration clauses.
The
purchaser argued that the arbitration clause could not be
enforced because the real estate broker could not be made
a party to the arbitration without the broker's consent. The
FAR Contract clause concerning arbitration has the following
statement:
"Any
claims or disputes with or against a real estate licensee
named in paragraph 18 will be submitted to arbitration only
if the licensee broker consents in writing to become a party
to the proceeding. This clause will survive closing."
The
Court acknowledged that this clause requires the consent of
the real estate broker to be involved in any arbitration;
however, the Court specifically ruled that any dispute arising
between the buyer and the seller must be submitted to arbitration.
The
result of this ruling may be beneficial to real estate brokers;
however, I am concerned that the result may not be beneficial
to the ultimate resolution of the dispute. The result of the
decision is that the buyer and seller are required to arbitrate
their dispute; however, if the real estate broker does not
consent to such arbitration, the buyer or seller who has a
claim against the real estate broker which may arise from
the same set of facts and circumstances as surround any claim
against the other party to the contract, is required to prosecute
the claims against the broker in Court while pursuing claims
against the other party through arbitration. This may be beneficial
to the real estate broker, but it does seem to be an unfair
burden placed on the parties to the contract and may serve
only to prolong the ultimate resolution of the dispute.
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