A buyer and seller execute a C.A.R. RPA for a $950,000 home. Both parties initial the arbitration clause. After closing, a dispute arises over alleged undisclosed defects. The buyer skips mediation entirely and proceeds directly to arbitration. Under the C.A.R. RPA's dispute resolution framework, what is the most likely consequence of bypassing mediation?
Correct Answer
C) The buyer may forfeit the right to recover attorney fees, even if the buyer prevails in arbitration
The C.A.R. RPA contains a standard printed mediation provision (paragraph 31A) that applies to all parties without requiring separate initialing — unlike the arbitration clause, which requires initials to be enforceable. Under the RPA, a party who refuses to mediate or who commences an action without first attempting mediation waives the right to recover attorney fees, even if that party ultimately prevails. This is an express contractual consequence designed to incentivize mediation as a first step in dispute resolution.
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Related Topics & Key Terms
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Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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