Many, many years ago, someone once said to me that people do not begin to negotiate until it is past the time to negotiate. How true this can be as borne out by a recent mediation.
The matter involved the purchase and sale of a condo. The mediation was held before any lawsuit was filed. About a year after the Buyers purchased the condo from the Sellers, the Buyers discovered a leak in the pipes under the slab of the condo. They also learned from their neighbors that this leak had allegedly occurred a few years previously when the Sellers owned the property. The Buyers contended that the Sellers failed to disclose this prior leak during the negotiations for the condo and that had the Buyers known of the previous leak under the slab they would not have purchased the property. The Buyers contended that they now are in the situation that when they decide to sell, they must disclose the leak and suffer a diminution in value.
The Sellers contended otherwise; that the Buyers were made aware of the leak by an inspection report and even agreed to a monetary offset in light of it.
In the hopes of avoiding a lawsuit, the parties with their respective attorneys came to mediation. For three hours, the Buyers and their attorneys and the Sellers and their attorneys threw contrary facts at me, asking me to recite them to the other side. The Buyers demanded a lot of money while the Sellers were unwilling to offer much, contending that the leak was old news , had been fixed by the Homeowners Association so that there was no need to disclose it in the Disclosure Statement, and that furthermore it was the responsibility of the Homeowners Association to fix the new leak and the Buyers’ homeowners insurance should have covered any costs they incurred ( not covered by the Homeowners Association) such that they have not really suffered any damages. Naturally, the Sellers disagreed arguing that the previous leak was NOT properly disclosed and should have been and that they have suffered damages as a result of this non-disclosure!
After three hours of getting nowhere, the parties decided it was best to adjourn the mediation. The Sellers and their counsel left. The Buyers and their counsel, suddenly realizing that the next step was going to be very expensive and time-consuming litigation, decided to have the “honest” conversation with me and tell me the amount of money they were really seeking to resolve it. Naturally it was much less than what they told me during the mediation. I stated I would contact Buyers’ counsel by telephone and convey this lower demand.
Over the next two hours, I mediated by telephone, speaking with Buyer’s counsel, then Sellers’ counsel, then Buyers’ counsel, then Sellers’ counsel et cetera conveying demands and responses back and forth. After two hours, the offer and demand came down to a minimal difference in money (probably representing no more than a few hours of attorneys’ time). Neither party would budge.
So, another important adage came into play; call it quits for the day and let the parties sleep on it and mull it over. Typically, taking the time to reflect on something helps to resolve it.
Sure enough it worked. The next morning, the matter settled. The parties realized that the minimal difference between the demand and offer was not worth filing a lawsuit and litigating over.
So… the lessons to be learned: sometimes the real negotiations do not even begin until the parties think that the “formal” negotiations are over, and their next option is litigation and sometimes, it is best to let things sit overnight to allow the parties to get a good night’s sleep and take a fresh look at the issue the next morning.
… Just something to think about.