A lease provision requiring disputes between landlord and tenant to be resolved through private arbitration rather than litigation in court. Arbitration decisions are typically binding and difficult to appeal.
Arbitration clauses in commercial leases specify that some or all disputes must be submitted to a neutral arbitrator or panel instead of being litigated in court. The clause typically identifies the governing arbitration rules (often AAA Commercial Arbitration Rules or JAMS), the number of arbitrators, the location, and whether the decision is binding. Binding arbitration awards are enforceable under the Federal Arbitration Act and state arbitration statutes, with very limited grounds for appeal. Some leases use arbitration only for specific issues like fair market rent determination while preserving court access for other disputes.
A lease requires binding arbitration for all disputes but specifies that the landlord selects the arbitrator from a pre-approved list. When the tenant disputes a $45,000 CAM overcharge, the arbitrator consistently sides with the landlord on procedural issues.
Before signing, evaluate whether the arbitration clause is balanced. Look for neutral arbitrator selection (mutual agreement or alternating strikes from a panel), shared costs, and the right to discovery. Consider whether you want certain disputes, like CAM audits, carved out from arbitration so you can preserve court access.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
