NEWS

The Legal Arbitration Clause in New Jersey Condominium Contracts

June 17, 2015

Michael J. Rankin reports a recent case addressing when a waiver of jury trial in a condominium purchase contract in favor of arbitration is legal. Arbitration can allow for a private, faster and cheaper way to resolve disputes over courts.  But when is such an arbitration clause unlawful?

The court examined an arbitration clause included in a developer’s form condominium purchase agreement stating that any disputes “shall be heard and determined by arbitration before a single arbitrator of the American Arbitration Association”. Despite what appears as clear language, the court found the arbitration clause was not lawful because it did not state that buyers were waiving their right to seek relief in court. The court held that the ruling applied to both statutory claims and common law causes of action even when a buyer was represented by counsel at the time of signing the contract.

The court decision makes clear that only a properly drafted arbitration clause is legal and will be enforced. Anyone faced with a contract with an arbitration clause and waiver of trial should have their contract evaluated by an attorney to confirm whether it is legal. Feel free to contact the law firm with any questions.