Resolving Disputes By Arbitration

Your title insurance (title insurance commitment, title insurance policy, or closing protection letter) may include a provision requiring the resolution of disputes by arbitration. Below are some answers to common questions about arbitration.

What is arbitration?

Arbitration is a process for resolving disputes that is less formal than litigation in court. It uses a neutral arbitrator instead of a judge or jury to hear evidence and issue a decision, known as an “award.” This award is generally final and binding on the parties in the case. In addition, arbitration has more limited discovery than in court, and is subject to very limited review by courts.

If you retained an attorney, he or she may help answer any further questions you might have about arbitration.

How does the arbitration process work?

Arbitration is designed to be a simple process.  Disputes may be decided by the submission of documents, by telephone conference, or by an in-person hearing.   You may hire an attorney to represent you in arbitration if you choose.

There is no judge or jury in arbitration.  Instead, disputes are resolved by an arbitrator, who is a neutral third party.

Under the ALTA Rules (explained below), arbitration will take place on an individual basis. The arbitrator can’t consolidate the claims of more than one person or proceed on a class-wide basis. But arbitration doesn’t affect the substance of your individual legal claims; arbitrators can award the same individualized damages and relief that a court can award.

What are the rules in arbitration?

The arbitration will take place under the Title Insurance Arbitration Rules of the American Land Title Association (ALTA Rules), which are available for download here

Under the ALTA rules, your arbitration will be administered by the American Arbitration Association (.

For disputes involving a consumer, the arbitration will use the AAA’s Consumer Arbitration Rules, as modified by the ALTA Rules and the terms of the title insurance contract. If neither party is a consumer, the arbitration will use the AAA’s Commercial Arbitration Rules, as modified by the ALTA Rules and the terms of the title insurance contract. 

Because the AAA may update its rules from time to time, and because the applicable rules for any particular arbitration will be the ones in force at the time, please check the Rules, Forms & Fees section of the AAA’s website to see the latest version.

 

What is the American Arbitration Association and what role does it play?

The American Arbitration Association is a not-for-profit organization committed to the resolution of disputes through the use of arbitration, mediation and other voluntary procedures.  The AAA acts similarly to a court clerk.  It manages the case file, appoints the arbitrator, and oversees the procedures for the arbitration. 

Who is the arbitrator?

An arbitrator is a neutral third party who hears the evidence and resolves the dispute based on the facts and the law.  The arbitrator is not employed by the AAA, ALTA, or the title insurance company.

In consumer cases, the AAA will appoint an arbitrator who is an attorney, unless the parties agree otherwise.