How Does Mediation Work for Texas Real Estate Disputes?
Direct Answer
Texas real estate disputes are often mediated because the standard TREC residential purchase contract includes a mandatory mediation clause.
Real estate disputes are among the most frequently mediated cases in Texas. The Texas Real Estate Commission (TREC) promulgated One to Four Family Residential Contract (Resale) — the standard residential purchase contract — contains a mandatory mediation clause in Paragraph 16. This clause requires the parties to mediate any dispute arising from or related to the contract before filing suit. The mediation must be conducted through a mutually agreed mediator or, if the parties cannot agree, through the American Arbitration Association. Failure to mediate before filing suit is a defense that can result in dismissal or a stay. Common real estate disputes mediated in Texas include seller disclosure failures (Texas Property Code §5.008 requires disclosure of known defects), boundary and survey disputes, title insurance claims, HOA covenant enforcement, and commercial lease disagreements. Texas's unique real estate landscape — including the state's large agricultural land market, oil and gas mineral rights issues, and the prevalence of deed restrictions in lieu of zoning in many cities — creates distinctive issues in real estate mediation. The Texas Real Estate Commission's complaint process also offers an informal dispute resolution option for complaints against licensed real estate agents.