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Virtual give and take | Mediation of real estate disputes heads for cyberspace
By: Emmet Pierce, The San Diego Union - Tribune
Nov 11, 2001 - In an increasingly wired world, where computer-savvy consumers shop online for everything from home loans to automobiles, you may think there are few surprises left.
Think again.
Charting a new course on the global information highway, the California Association of Realtors is providing a mediation service that allows home buyers and sellers to resolve legal disputes over the Internet.
The idea is to enable people to settle arguments about move-in dates, disclosures and fees without ever leaving their homes or offices. Imagine one day logging onto the Internet and instead of hearing "you've got mail," an electronic voice announces that "you've got a settlement."
"It's all online," said association spokesman Mark Giberson. "People need never talk. It's totally online."
The Realtor association, known as CAR, launched the service in partnership with San Francisco-based SquareTrade in October. Partnering with the online dispute-resolution company was a logical step, Giberson said.
"SquareTrade developed the software that allows you to do it and we are the largest (state) Realtor organization in the country."
According to CAR, SquareTrade can be used for all buyer-seller real estate-related disputes. Most residential purchase agreements in California require buyers and sellers to attempt to resolve their legal disputes through a mediator before going through formal arbitration or the courts. Unlike arbitrators, who impose settlements, mediators help differing parties come to a voluntary agreement.
Disputes can arise over such issues as the completeness of disclosure statements about home repairs and structural defects; the adequacy of property access easements; faulty sewer lines and septic tanks; or restrictions on the ability of a homeowner to expand or remodel.
Under SquareTrade's program, to file a complaint, an Internet user logs onto the company's Web site and fills out an online form identifying the problem and possible resolutions. SquareTrade then contacts the respondent with the details and both parties work with a CAR-approved mediator.
SquareTrade cut its cyber-teeth in the world of e-commerce. To date, most of its business has involved disputes between consumers and companies that sell goods over the Internet, said Steve Abernethy, SquareTrade's chief executive officer. The service began operating in early 2000.
SquareTrade says most of its cases are resolved within three weeks. Because all communications are in writing, there is less chance of misunderstandings than in traditional negotiations, proponents say.
"It costs $100 to file and $100 per hour to access our mediator," said Abernethy. "If you are referred by a California Realtor you get a 25 percent discount on the fees. Until the end of the year we offer free filing fees." The typical SquareTrade case takes three to six hours of mediator time.
Face-to-face mediations can be more expensive. In a typical situation, they may cost $600 to $900, said Tiffiney Welles, director of legal affairs for the San Diego Association of Realtors (SDAR).
"We deal in the nature of 15,000 disputes a month. Basically there is an e-commerce side to our story and a real estate side."
While the notion of settling real estate disputes online sounds futuristic, SquareTrade isn't the only such company that has ventured into cyberspace. According to Abernethy, there are a handful of groups competing for business.
Cybersettle offers an online, computer-assisted method for settling insurance claims. Internet Neutral mediates disputes between Internet-based companies and their customers. Straddling both sides of the virtual fence, clickNsettle.com offers online and in-person dispute resolution.
IntelliCOURT is an online forum for resolving legal disputes through mediation or arbitration. If you enjoy role playing, you can go to a virtual courtroom. "iCourthouse" offers "a greatly streamlined version of the court system in the real world," its Web site states. "Cases here move at Internet speed."
What all such services have in common is an alternative to the time-consuming task of scheduling in-person meetings with mediators. A Harvard Business School graduate, Abernethy, 35, said he got into online mediation because it was an unexplored niche on the Internet. "The law was an area that wasn't being proactively touched."
Ahead of its time?
Just how much of the multimillion-dollar dispute-resolution industry will find its way to online sites is uncertain.
While CAR's program is considered cutting edge within the real estate industry, some critics doubt that online mediation's time has come. Bruce Leonard Beal of Internet Neutral doesn't expect online mediation to replace old-fashioned negotiations any time soon.
"Many businesspersons remain personally uncomfortable with computers, the Internet, and especially with specialized communication technologies, such as chat rooms, instant messaging, and videoconferencing," Beal wrote in a 1999 report to Ohio State University Law School. Little has changed since then, he said.
Online mediation won't come into its own until videoconferencing becomes much more commonplace, offering a modern version of face-to- face discussion, he holds.
Some critics worry that the Internet may change the nature of mediation, which depends on verbal give and take. In traditional settings, conflicting parties often adjourn to separate rooms while the mediator carries proposals back and forth, acting as a facilitator.
It's also unclear whether the online business will take clients away from lawyers, said June Barlow, vice president and general counsel for CAR.
"I don't see it as having an impact," she said. "I think mediation in general reduces attorney fees. This is just a different mechanism."
Welles, who oversees SDAR's Real Estate Mediation Center, is skeptical of online dispute resolution. Although individual SDAR members may choose to use SquareTrade's service, "it's not something we're promoting" as an organization, she said.
A big part of a mediator's job is to help people work out their differences amicably, she added. "I think in some instances that e- mail is great, but when emotions are high, it is too easy to be mean. It is a lot more difficult to look someone in the face and say, `I'm done with you.' "
Both online and traditional mediators say they resolve the bulk of cases that come before them. SDAR's mediators claim a success rate of about 80 percent. SquareTrade reports a success rate of 90 percent. Abernethy says he has grown accustomed to skepticism about his product.
"People who have not experienced it are a little uncomfortable with it," he said. "But we have handled 150,000 disputes and it works. Some people might want to have face-to-face mediation and they can choose that. What we are excited about is the ability to offer an alternative." |
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