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Leonard Newman Talks About the New Orange County REALTORS® Real Estate Mediation Center


By Sherri Butterfield
WRITER AND EDITOR

Mediation is an alternative means of dispute resolution that saves time, preserves business relationships, protects privacy, and resolves differences without leaving an entirely new set of problems in their wake.

Leonard Newman obtained his education from Biola University, the Strauss Institute for Dispute Resolution, and Pepperdine School of Law. During some twenty years as a real state practitioner, he has sold or managed the sale of properties valued at more than half a billion dollars. He is well versed in both business and social alternative dispute resolution and regularly conducts mediations involving financial disagreements and civil harassment cases for the Orange County Superior Courts.

Currently, Leonard chairs the Orange County REALTORS® Professional Standards Committee. Also serving with him on this committee and acting as neutrals during mediations are Florence Bell, Craig Borner, Rick Cosenza, Jill McGovern, Marty Samuel, Rick Trevers, Zach Wallin, and Bryan Zuetel.

How did you become involved in mediation?
I have been broker/owner of Newman Realty since 2008. While managing agents and brokers, I discovered that there were areas of risk management of which I was unaware. I attended Professional Standards training, found that it was very interesting, and got hooked.

What sorts of disputes arise in real estate?
People disagree about the terms of a contract or purchase agreement, about the size and condition of a piece of property that has been bought or sold, or about when, how, and how much someone was supposed to be paid.

In what ways might a dispute of this kind be settled?
Sometimes, disputes go unresolved for years; but typically, when a lot of money is involved, the disputants want a swift resolution. The options for formal resolution are litigation, arbitration, and mediation. Even Abraham Lincoln, who practiced law in Springfield, Missouri, before being elected to the White House, recommended against on litigation. In lecture notes, he wrote, “Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often the real loser—in fees, expenses, and waste of time. As a peacemaker, the lawyer has a superior opportunity of being a good man. There will be business enough.” That leaves arbitration and mediation as the two means of dispute resolution.

What are the primary differences between arbitration and mediation?
Many people don’t know very much about either arbitration or mediation and really don’t care until they are involved in a dispute. Their lack of knowledge results in consternation and fear. Knowing what each process is and how it works can serve as a preventive measure.

Arbitration involves telling your story to a hearing panel and trusting the members of that panel to deliver an award based on their perception of what happened. During arbitration, anyone who has a financial interest in the outcome has a right to be present, and there may be attorneys, court reporters, and witnesses in the room.

Mediation is a much more informal process than arbitration. By offering the disputants an opportunity to take part in a dispute resolution dialog, mediation makes it possible for them to maintain their friendship, to control the conflict outcome, and to move forward as business colleagues.

What are the advantages and benefits of mediation?
Mediation is not intimidating. Arbitration can be an extremely intimidating process. Mediation eliminates that intimidation.

Mediation saves time. Mediation can be over and done in a day. Arbitration can be a long and drawnout process. For example, it may take thirty to forty-five days just to schedule an arbitration; and if you win but the other party does not pay, you must apply for a “show cause” hearing. Meanwhile, several months or more may elapse.

Mediation preserves friendships and business relationships. This characteristic is especially important in real estate, which is so dependent on establishing and maintaining a network of personal friendships and professional relationships.

Mediation protects privacy. If an arbitration escalates to the Superior Court level, it is no longer private. And if the arbitration results in a judgment, that goes on your record. Arbitration outcomes through the court become a matter of public record; whereas, mediation proceedings can be kept confidential.

Mediation produces a mutually acceptable outcome. The purpose of mediation is to turn a situation that is bad into one that is good. The idea is to persuade two people to enter into a dialog that will lead to a mutually acceptable agreement. Once the mediation is over, both parties sign the agreement. If they do not sign, the mediation has not been successful. But 80 percent of all mediations settle.

What sorts of disputes does the Orange County Real Estate Mediation Center handle?
Although all the disputes handled by the Orange County Real Estate Mediation Center are real estate–related, the circumstances are quite varied and may involve the specific details of a business transaction, a disagreement between REALTORS® regarding commission or other compensation, or a misunderstanding between buyer and seller.

For example, there was one case where a pair of newlyweds had purchased a home in early summer. When the fall rains came, they had to place buckets all over the house because the roof leaked like a sieve. In this instance, the seller had been aware but had failed to disclose that there were problems with the roof. The buyer wanted to be made whole. The challenge was to reach a settlement to the satisfaction of both parties.

Who is eligible to use these mediation services?
The services of the Orange County Real Estate Mediation Center are available for use by members of Orange County REALTORS® and by buyers and sellers whose dispute involves a real estate transaction in which one or both of them were represented by REALTORS®.

You have indicated that mediation is less costly than arbitration in terms of time, money, and relationships, but what does the mediation process cost?
The Orange County Real Estate Mediation Center has a fee schedule, which is available upon request. Because mediation is now a member benefit, a portion of the cost is borne by the Association so that the first hour is free. And as Abraham Lincoln wisely suggested more than one hundred and fifty years ago, compared with litigation, the total cost of mediation is relatively insignificant in the larger scheme of things.

If buyers, sellers, or REALTORS® want to take advantage of these special mediation services, how do they arrange to do so?
Members of Orange County REALTORS® or buyers and sellers who have been represented by a REALTOR® and who are involved in a real estate–related dispute are eligible to request the services of an Orange County REALTORS® mediator. They can do so by filling out forms that are available online at www.ocar.org/mediation-center or by calling Orange County REALTORS® Professional Standards Director Vivian Vanderwerd at 949-586-6800, ext. 125.