Four friends (two couples) bought land together where they were going to live in two
separate houses on the land. When they began discussing the purchase, they realized
that some disputes might arise. They decided up front how to split costs, how to use the
land, and agreements on visitors. To further protect their relationship and investment,
they reached an agreement that
- When a dispute arises, they will sit down and talk directly with the other couple and
try to resolve it.
- If they are unable to work it out, they will call in a mediator agreeable to all to work
the dispute through.
- If mediation is not successful, then they will seek an outside arbitrator.
- If arbitration does not work, and only as a last resort, will anyone be allowed to file
a lawsuit.
They all signed the agreement, making it legally binding. They put into motion a legally
binding set of mechanisms to both resolve disputes and preserve their good relationship.
Because they had been proactive, over the next two years they only had two situations
that arose—and they informally resolved both. If something were to “blow up,” they are
ready with a productive dispute mechanism.