Mediation Mitigates Landlord–Tenant Disputes From The Housing Crisis

The recent housing crisis has not been easy on home-owners. Many home-owners have been forced to foreclose, ending up nearly bankrupt and taking down large banks with them in the process. Bank of America, Wachovia and US Bank Corp are all large corporations that lost billions in the mortgage crisis.

But a less-discussed off-shoot of the housing crisis is the rise in tenant and landlord disputes that has originated from this unprecedented event. Here’s how it plays out, in general. Homeowners are forced to sell their houses at ridiculously low prices since they are unable to pay the mortgage. The bank forecloses on the house and short-sells it to another willing party for a bargain. The new homeowner now rents it out to the same person that originally owned the home or another person in a similar situation that recently lost a home to someone else. The problem in these situations is that the new person that is now renting is not in any better position to pay rent than he was to pay the mortgage. The landlord knows that very well but would rather get something out of it than keep it vacant and pay a mortgage on it.

The unusual thing about this process is that the tenant is in an unfavorable negotiating position. Almost bankrupt, and at the mercy of the landlord’s whims even more so than usual. The landlord, on the other hand is pretty stressed as well knowing that his tenant is less than ideal. This situation creates stress and anxiety and increases the chances of dispute many-fold, as has been observed recently. Disputes can arise in one of many ways. The tenant fails to pay rent on time, or the landlord makes unreasonable requests (like asking the tenant to fix a broken refrigerator to compensate for a late payment), Etc. Rules bend in every direction, and end up breaking the trust that a landlord-tenant relationship requires.

Mediators realize the situation and can help in many ways. Home-owners associations, tenants and landlords have all started to realize the potential for such issues and have resorted to hire mediators to go in and settle minor disputes before they become a major issue resulting in a negative situation for everyone. The mere knowledge of the presence of a mediator that is looking out for both party’s interests is a major deterrent for both parties to commit fraud or take advantage of the crisis conditions.

Mediators help by ensuring that solid but reasonable rental agreements are written and that both parties are aware of relevant federal and state laws. They ensure that the lines of communication always stay open and encourage both parties to communicate even the smallest issues up to the mediator and leave it up to them to decide on the course of action. The “log” of issues is very useful in cases where a more serious conflict does arise.