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ARBITRATION DISCLOSURE AND RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT This form approved by the Minnesota Association of REALTORS®, which disclaims any liability arising out of use or misuse of this form. ® 2009 Minnesota Association of REALTORS®, Edina, MN 1. Page 1 2. ARBITRATION DISCLOSURE 3. You have the right to choose whether to have any disputes about disclosure of material facts affecting the use 4. or enjoyment of the property that you are buying or selling decided by binding arbitration or by a court of law. By agreeing 5. to binding arbitration, you give up your right to go to court. By signing the RESIDENTIAL REAL PROPERTY 6. ARBITRATION AGREEMENT (ARBITRATION AGREEMENT) on page two, you agree to binding arbitration under the 7. Residential Real Property Arbitration System (Arbitration System) administered by National Center for Dispute Settlement 8. (NCDS) and endorsed by the Minnesota Association of REALTORS® (MNAR). The ARBITRATION AGREEMENT is 9. enforceable only if it is signed by all buyers, sellers and licensees representing or assisting the buyers and the sellers. 10. The ARBITRATION AGREEMENT is not part of the Purchase Agreement. Your Purchase Agreement will still be 11. valid whether or not you sign the ARBITRATION AGREEMENT. 12. The Arbitration System is a private dispute resolution system offered as an alternative to the court system. It 13. is not government sponsored. NCDS and the MNAR jointly adopt the rules that govern the Arbitration System. NCDS 14. and the MNAR are not affiliated. Under the ARBITRATION AGREEMENT you must use the arbitration services of 15. NCDS. 16. All disputes about or relating to disclosure of material facts affecting the use or enjoyment of the property, excluding 17. disputes related to title issues, are subject to arbitration under the ARBITRATION AGREEMENT. This includes claims 18. of fraud, misrepresentation, warranty and negligence. Nothing in this Agreement limits other rights you may have under 19. MN Statute 327A (statutory new home warranties) or under private contracts for warranty coverage. An agreement to 20. arbitrate does not prevent a party from contacting the Minnesota Department of Commerce, the state agency that 21. regulates the real estate profession, about licensee compliance with state law. 22. The administrative fee for the Arbitration System varies depending on the amount of the claim, but it is more 23. than initial court filing fees. In some cases, conciliation court is cheaper than arbitration. The maximum claim allowed 24. in conciliation court is $7,500. This amount is subject to future change. In some cases, it is quicker and less expensive 25. to arbitrate disputes than to go to court, but the time to file your claim and pre- hearing discovery rights are limited. The 26. right to appeal an arbitrator's award is very limited compared to the right to appeal a court decision. 27. A request for arbitration must be filed within 24 months of the date of the closing on the property or 28. else the claim cannot be pursued. In some cases of fraud, a court or arbitrator may extend the 24 -month 29. limitation period provided herein. 30. A party who wants to arbitrate a dispute files a Demand, along with the appropriate administrative fee, with 31. NCDS. NCDS notifiesthe other party whomayfile a response. NCDS workswith he partiestoselect and appointan arbitrator 32. to hear and decide the dispute. A three - arbitrator panel will be appointed instead of a single arbitrator at the request 33. of any parry. The party requesting a panel must pay an additional fee. Arbitrators have backgrounds in law, real estate, 34. architecture, engineering, construction or other related fields. 35. Arbitration hearings are usually held at the home site. Parties are notified about the hearing at least 14 days in 36. advance. A parry may be represented by a lawyer at the hearing if he or she gives five (5) days advance notice to the 37. other party and to NCDS. Each party may present evidence, Including documents or testimony by witnesses. The arbitrator 38. must make any award within 30 days from the final hearing date. The award must be in writing and may provide any 39. remedy the arbitrator considers just and equitable that is within the scope of the parties' agreement. The arbitrator 40. does not have to make findings of fact that explain the reason for granting or denying an award. The arbitrator may 41. require the party who does not prevail to pay the administrative fee. 42. This Arbitration Disclosure provides only a general description of the Arbitration System and a general 43. overview of the Arbitration System rules. For specific information regarding the administrative fee, please see the 44. Fee Schedule located in the NCDS Rules. Copies of the Arbitration System rules are available from NCDS by calling 45. (888) 832 -4792 or on the Web at www.ncdsusa.org orfrom your REALTOR9.It you have any questions about arbitration, 46. call NCDS at (888) 832 -4792 or consult a lawyer. 47. THE RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT IS A LEGALLY BINDING CONTRACT 48. BETWEEN BUYERS, SELLERS AND LICENSEES. IF YOU DESIRE LEGAL ADVICE, CONSULT A LAWYER. MN:ADRAA -1 (6/09) /O t8�