Arbitration Clause in Residential Purchase Agreement - All Parties Must Sign
By: MARY S. RANUM
Spring 1995
The separate arbitration disclosure and agreement contained in the widely used standard residential purchase agreement drafted by the Minnesota Association of Realtors provides that the agreement is "only enforceable if all parties to the purchase agreement and brokers/agents have agreed to arbitrate as acknowledged by signatures below." In a recent unpublished opinion, the Minnesota Court of Appeals interpreted this language strictly and held that an arbitration agreement did not exist where a seller's agent had signed it but the seller had not.
The parties seeking arbitration argued that the seller's agent had signed the agreement on the seller's behalf. However, the court held that unless all parties separately sign the agreement, it does not exist and cannot be enforced by any of the parties to the transaction.
If you are involved in a residential transaction and wish to have arbitration available in the event of a dispute regarding the conditions of the property, it is critically important that all parties to the agreement and all real estate agents or brokers involved in the transaction separately sign the arbitration agreement.