Real Realty, Inc. is a properly formed and operating realty company who is retained by a local homeowner to sell their house. Real Realty listed the house and sold it in a few weeks and earned a commission on the sale.

After closing, the buyer moved in and learned that several structural components of the house are infested with termites. The damage is extensive and one contractor even tells the buyer that they think the house will have to be torn down. The contractor further states that the termite infestation would have taken years to get to the point that it was currently at and that anyone who looked at the house would have seen the problem.

While preparing to list the house, Real Realty had the house inspected and received a report form the inspector that described the home as "termite-free." Real Realty did not have any control over the property at any point during the sales process. 

For the purposes of this question, it is an absolute defense to the buyer's claims if Real Realty was an innocent seller - that is they acted reasonably to investigate the property prior to listing it and the problems at the property are not their fault.

Real Realty brought the inspector into the lawsuit as a defendant (added inspector as a cross-claimant). 

At the first hearing in the case, the court asks the parties if they have considered Alternative Dispute Resolution and asks if the parties would consider going to mediation prior to the trial. 

1. What is at least one (1) form/type of discovery Real Realty should use to obtain evidence to use in establishing its innocent seller defense? In answering this question, please explain what the discovery process is and how the discovery identified by you will generally work and why you think it will be helpful to the defense. 

 

2. Please explain what mediation is and provide and overview of how it works. Also, please indicate whether you think Real Realty should agree / not agree to attend mediation and why.