What is an “arbitration clause” in a real estate contract?

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An arbitration clause in a real estate contract is a provision that requires the parties involved to resolve any disputes that may arise through arbitration instead of going through litigation in a court. This clause is included to provide a more efficient and often less costly means of dispute resolution compared to traditional court proceedings.

Arbitration typically involves the appointment of an impartial third party, known as an arbitrator, who hears the evidence and makes a binding decision. This process is generally more private than litigation and can be faster due to a streamlined procedure. By including an arbitration clause, the parties agree in advance to this method of dispute resolution, which can help minimize uncertainty and prolongation associated with court cases.

In contrast, the other options address different aspects of contracts and dispute resolution. Some involve litigation, which is not what an arbitration clause does, or pertain to contract terms unrelated to dispute resolution.

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