What does the term 'arbitration' refer to in real estate disputes?

Arbitration in real estate disputes specifically refers to a method of resolving disagreements outside the court system. It involves an impartial third party, known as an arbitrator, who reviews the evidence presented by both sides and makes a binding decision regarding the dispute. This process is often favored in real estate transactions because it can be faster, less formal, and more cost-effective than traditional litigation.

Moreover, arbitration can help preserve relationships between disputing parties, as it typically encourages a more amicable resolution than might be achieved in a courtroom. It allows for a more private resolution process, which can be particularly beneficial in real estate transactions where confidentiality is a concern.

In contrast, the other options represent concepts that do not accurately describe arbitration: the legal requirement to sue addresses a formal court action, enhancing business relationships pertains to ongoing interactions rather than dispute resolution, and discussions between clients do not imply the structured process that arbitration entails.