Litigation

By: Nancy J. Glidden

With the approach of Spring and Summer comes a more active residential real estate market. The process of buying or selling a home may have become just a little more complicated due to the recent decision handed down by the Pennsylvania Superior Court in Trowbridge v. McCaigue.

Buyers, sellers, and real estate agents need to be aware that, under certain circumstances, what is intended to be only an “offer to purchase” can instead be a legally binding and enforceable “contract for sale.” According to the majority of the Court in Trowbridge, this occurs when an “offer to purchase” real estate contains all essential terms. However, one of the judges, Justice Shogan, felt the majority ignored the plain language of the document as well as the intention of the parties. He indicated that what was clearly identified as a “purchase offer” was an “agreement to agree,” and it was not on its face intended or otherwise to be an express and binding contract.

To avoid the result that was obtained in Trowbridge, one lesson seems to be that when making an offer to purchase real estate, clearly specify that any essential terms referenced in the offer are intended to be the subject of further negotiations.

For more information, contact Nancy Glidden.

By: Daniel Hanifin

What does an arbitration clause mean to me?

Most, if not all, customer account forms used by brokerage houses contain arbitration clauses.   An arbitration clause is a commonly used clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside of the courts, and is therefore considered a kind of forum selection clause.  The vast majority of the clauses state that arbitration must take place before either the New York Stock Exchange (NYSE) or the National Association of Securities Dealers (NASD).  However, in 2007, the NASD and the NYSE combined their dispute resolution divisions into one body, known as the Financial Industry Regulatory Authority (FINRA).   (www.finra.org)

Arbitration before a FINRA panel is similar to going to court, but it is usually faster, cheaper and less complex.  FINRA has established discovery procedures that assist in simplifying the process.  In arbitration, the parties present their dispute through witness testimony and documentary evidence much as they would in court.   However, rather than a judge presiding over the proceedings, a panel of three arbitrators, two public and one industry, preside over the hearing.  The arbitrators study the evidence and render a decision just like a judge.  These decisions are binding upon the parties except in very limited circumstances where a court may overturn the decision; however, a reversal of an arbitration decision is rare.

This is part of an ongoing series of postings related to claims related to your investment accounts.  For more information on securities arbitration and claims against your investment professionals please contact Daniel M. Hanifin.