1. Cindy
    August 1, 2008 @ 4:04 pm

    Our organization, Homeowners Against Deficient Dwellings, hadd.com, (HADD) receives thousands of builder complaints and email inquiries every year from consumers with shoddy new houses, illusory warranties, and lately predatory lending complaints when a builder’s lender was used.

    Many times the homeowner is prevented from seeking legal recourse due to an arbitration clause. Even if they don’t have the clause in the purchase contract, it’s often in the 10 year warranty policy that the builder buys, and that the homeowner doesn’t see until after closing. Quite a few companies in the building and warranty industies were using Construction Arbitration Services (CAS), the company that was part-owned by a disbarred lawyer. Regardless of which company the industry specifies must be used, homeowners report bias, disregard for the law, and no explanation of the arbitrator’s decision.

    I have read news articles saying predatory loans sometimes have arbitration clauses, too. Some states’ legislation to deal with mortgage fraud includes provisions to make arbitration clauses unenforceable.

    Because of my own construction defect case, and then experience working with HADD, I firmly believe that these arbitration clauses serve as a sheild for corporations, and a way to hide complaints from consumers who do their research before buying.

    Just FYI, anyone who has a VA or FHA loan does not have to arbitrate with one of these 10 yr warranty companies. Federal housing regulations and the FTC have both said they do not. The regulation is 24 CFR 203.204(g), which any attorney should be able to look up quickly. If a homeowner wants to see it it can be found on Cornell Law school’s site or a law library, in the Code of Federal Regulations, Title 24 which is Housing. Then go to section 203.204(g). The regulation says arbitration AND court must be options. Ask the librarian to help you if you’re on your own.

    HADD has more info.


  2. Jordan Fogal
    August 3, 2008 @ 2:54 pm

    Until you have gone though arbitration there is no way you can fully understand how horrible it is. Imagine a consumer pitted against a stable of big business legal eagles. They have done this so many times they know all the outs. They do not even have to prepare they just go in lie and attack you. The arbitrator rules in their favor because they are her constant meal ticket. AAA arbitration had already entered into a contractual agreement with our builder, Stature/Tremont. They had already shaken hands or what would be done to us. Our builder’s lawyers found the entire process amusing. They knew they had no money in that companies account and if by some miracle we had a fair arbitration…we could only be awared a worthless piece of paper.

    We were forced into this process against our will and made to pay for it. We were threatened that if we did not comply we would be ruled against in our absence. We were told we had to pay up front and if we did not we would not be allowed to even participate and would be ruled against in absencia. We were threatened with arbitration. Why would a fair process be use by big business to threaten a consumer?


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