Mediation Required Before Litigation

Question: Before we bought our $800,000 Peoria home last summer, we only looked at the home during the day. We were never told by the seller that next door to our Peoria home was a short-term rental home and that there would be loud parties almost every night. When we complained to the owner of this short-term rental home, he just laughed at us and hung up the phone.  We now want to sell our Peoria home and buy a home in Glendale that is in an HOA community that prohibits short-term rentals.  Our real estate agent says, however, that we have to disclose this short-term rental problem to any buyer of our Peoria home, and that we potentially could lose up to $100,000 on the sale of our Peoria  home. We want to file a lawsuit against the seller for this potential $100,000 loss, but our real estate agent says that under the AAR Purchase Contract we first have to go to mediation. Do we have the grounds to file a lawsuit against the seller? If so, how do we find a mediator?

Answer: First, you probably have the right to file a lawsuit against the seller for failing to disclose a material fact, namely these “noisy” short-term rentals next door to your home. Second, there are numerous mediators in the Phoenix area that can easily be located online. Although 20 years ago there were very few mediators, the cost of litigation has become so expensive that mediation, as a practical matter, is mandatory before filing a lawsuit. Furthermore, most judges will not have a trial without first requiring private mediation or, if the parties cannot agree on private mediation, the judge will appoint a mediator, usually an experienced attorney or even another judge with a free calendar day, to conduct a private mediation.

Mediation is a skill, and many mediators have attended mediation seminars on how to mediate a dispute, e.g., two-day mediation seminars at a major university. In general, former judges make the best mediators. The cachet of being a former judge can not only effectuate a settlement at mediation, but can assist the attorneys to persuade their clients at the mediation to agree to a reasonable settlement. For example, when a former judge says, “I was on the bench for 20 years, and I have had many cases similar to your case, and here is how I see your case going ….” that statement to a client is generally very persuasive for settlement.

Note: Judges are at the top of public opinion polls, while lawyers and politicians are at the bottom. Paradoxically, a judge is not only a lawyer but usually has some political skills to get appointed as a judge by the governor.