Tom and Susan sign a California Residential Purchase Agreement (RPA) for a home in Long Beach. The RPA includes a mediation clause. After a dispute arises, Tom wants to skip mediation and go directly to court. Under the terms of the standard California RPA, what consequence may Tom face?
Correct Answer
A) He may lose his right to recover attorney's fees even if he prevails in the lawsuit
The standard California RPA mediation clause provides that if a party fails to mediate before filing a lawsuit or arbitration, that party will not be entitled to recover attorney's fees, even if they are the prevailing party. This creates a strong financial incentive to attempt mediation first.
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