New California Law Affecting Real Estate Mediation

Real Estate Law Litigation by Ashlee D. Gonzales, Esq.

Approximately 95% of pending lawsuits end in a pre-trial settlement, with a majority of those settlements occurring at mediation. Mediation has been extremely successful for our clients, and it is typically more economical and efficient than going through the court system. In most California counties, it can take as long as 18 months to 2 years from the date of filing to when a trial date is set. Balancing financial concerns and the need for a swift resolution, we almost always encourage our clients to participate in mediation whenever possible.

One of the most beneficial factors of mediations is confidentiality. Participants are encouraged to candidly discuss the case, knowing any evidence or discussions are confidential. California law provides that any communications, writings, and evidence presented at mediation, amongst other things, cannot later be introduced or used against the other side. This open channel of communication and candidness typically results in a resolution, relieving both sides from the financial burden of trial.

Approved by the Governor on September 11, 2018, and effective January 1, 2019, Senate Bill 954 will now require attorneys to disclose to their clients the confidentiality rules related to mediation and obtain a signed acknowledgment from their clients confirming they understand these rules. Under the new bill, attorneys will need to provide their clients with a printed disclosure containing the confidentiality restrictions described in California Evidence Code §1119. The attorney must provide this printed disclosure as soon as reasonably possible before the client agrees to participate in the mediation. In summary, Section 1119 states that any evidence, writing, communications, negotiations, and settlement discussions made for the purpose of mediation shall not be compelled in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding, and shall remain confidential.

One exception under the bill is that communications or writings that are made or prepared for the purpose of mediation are not made inadmissible, or protected from disclosure, if the communication or writing is to be used in an attorney disciplinary proceeding to determine if the attorney has complied with California Evidence Code §1129. Section 1129 was added to the Evidence Code by Senate Bill 954, and sets out the requirements for the written disclosure form required under the bill.

The requirements provided for in Evidence Code §1129 state that the written disclosure form shall 1) be printed in the preferred language of the client in at least 12-point font, 2) be printed on a single page that is not attached to any other document provided to the client, and 3) include the names of the attorney and the client and be signed and dated by the attorney and the client. One thing to note is while the written disclosure is required, the failure of an attorney to comply is not a basis to set aside an agreement prepared in the course of mediation. To access a sample printed disclosure form provided for and approved under Senate Bill 954, click here.

This new bill is significant in that it creates a new duty for attorneys concerning mediation. However, we believe it is important clients are fully informed of the confidentiality rules in order to increase the effectiveness of mediation. Giving clients a detailed description of the disclosure in writing may provide clarity in an otherwise convoluted area of the law. We are eager to see the effect of this new bill and how it will change the mediation preparation process. If you have any questions or concerns regarding this new bill, we would love to hear from you!

Latest Posts

Real Estate Contracts & Transactions

Out of Contract? Not So Fast…

by Adam Pedersen, Esq. on August 28, 2018

In the highly-competitive real estate market in California, agents are being more aggressive in enforcing contract terms. So before you tell your client that you are “out of contract”, you might want to be sure the contract is actually cancelled! [Read More]

Landlord & Tenant Law

What a Three-Day Notice to Pay Rent or Quit Really Means

by Lorena Roel, Esq. on September 20, 2018

It is after Labor Day weekend and that means school supplies, summer vacation credit card bills, and preparing for the holidays. With all these added costs, the tenant may not have enough money to pay rent and the landlord serves [Read More]

Real Estate Contracts & Transactions

Can A Buyer Back Out of a Non-Contingent Offer?

by Simon Offord, Esq. on October 2, 2018

In my last article, we discussed liquidated damages in the context of a residential real estate purchase contract.  This article will examine whether a buyer may have a right to back out of a contract and receive their full deposit [Read More]