When an arbitration clause in a mortgage lacks mutuality, i.e., it requires only the borrower to arbitrate disputes arising out of or relating to the mortgage, is that arbitration obligation enforceable?
A recent California Court of Appeals decision held that it was not. Flores v. Transamerica HomeFirst Inc., 1993 Cal. App. 4th 846 (2001 Cal. App.), review denied, 2002 Cal. LEXIS 288 (Jan. 6, 2002). That case involved a “reverse mortgage” entered into by the plaintiffs, then aged 80 and 76, that contained an arbitration clause intended to resolve disputes by the borrower arising under the mortgage.
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