Can you cross out the arbitration clause? yes, but then you won't have the house - and actually would you want it? perhaps we get too emotionally attached. If you look at your credit card statements, car contracts, etc. etc. you will find this binding arbitration clause tucked in the fine print some where. Of course it is never explained to you what that means and of course you should take it to your attorney to check it out (if you could), and then find that either you decide not to purchase, take the credit card or just suck it up and pray nothing happens to you.

I purchased my house brand new in June 2006. I lived in it 28 days before it started showing problems. The builder wanted to make some minor repairs and told me it was nothing. When I resisted they fought back in addition to telling my neighbors I was trying to extort money from them (and also in writing told the state attorney general). I continued to fight as my house was developing all kinds of issues. 2 1/2 years later I am entering binding arbitration. I am just waiting for the date. I have had 2 1/2 years to collect the data that will prove my house has 'issues'. In this short time period the foundation has sunk 1 1/2" to 2" and my roof is starting to cave in because the trusses have become load bearing for the entire house. These are real issues. The state based on this information has valued the house at zero. Can I sell it? no Can I rent it? no Can I refinance? of course not. I am truly in an upside down position through no fault of my own.

I have been documenting my house for the entire time. Take a look and for those who might believe the people who have "bad houses" are just complaining, perhaps I can change your mind. My question is: Would you want to live in a house like this and would you want to be continuing to pay the mortgage?

http://www.justanotherlemon.com/CCFL/pulte.htm

Forcerd arbitration should be against Federal law. What it really is turns out to be a demand for the consumer to sign away a right - the right of redress in the courts. It is abusive and frequently forced on consumers via coercive or underhanded means.

If someone offers you this, think twice. They may be all but admitting that their product or service is junk.

@VanniHorn:
I beleive you had to have purchsed your home according to hte currecnt regulations prior to July of 2006. We purchased in September of 2006 and at the moment do not qualify. Thank you for the info though.

@Esquire99:

As far as impartial goes. Our arbitrator on our home in Savannah, Ga was a home inspector in Savannah, Ga. How impartial do you think he is going to be when the largest builder in town is one of the parties in the case. Similar to MBA, I will only go through arbitration once but this guy does inspections all the time and is a former contractor who still does work on the side. I would hardly call that impartial.

My builder also is forced by the insurance company (warrant company, arbitration administration company, whatever you want to call it) to own stock in the company before selling policies on the homes. If you think I am making this up please check it out. I found the information available online with the state in which the insurance company is chartered. Its similar to balance sheet on a publicly traded company. My builder owns a set amount of voting shares in the company and in return gets paid a dividend on those shares. The less money the insurance company pays out in arbitration awards, the higher the dividend is for my builder. Impartiality at its finest.

@Esquire99:

First,

My name is John Rechtien. Id like to respond to some of what was in esquire99 response.

I didnt read the contract:

I read the entire contract. I knew I was getting arbitration. What your not taking into account is that arbitration is mandatory. If I wanted to buy this home, I was required to agree to arbitration. Do you understand how that works? All national builders with the exception of KB Homes (more on them at FTC.gov) use MBA in ALL new home contracts. If you want to buy a home from them you will agree to it.

If your not competant enough:

I am perfectly competant enough. This was not my first home purchase. In fact it wasnt my second. I own a rental home and another property and had just sold a previous home when I entered into this contract. Had I ever used a real estate attorney prior to this date? The answer is no. The only difference be tween this home and the other homes I had purchased was that this was a new home. I perfectly understood that when I purchased the home I had to use arbitration to remedy any issues with that home.

This stuff is just absurd:

No really it isnt. It is mandatory binding arbitration. As far as buying the home yes we had inspections done. We did a walk through of the home to include prior to it being completed on several occasions. There are many issues with a home that are not identified in simple inspections. As a home settles into its foundation problems arise as a result of normal settling and are multiplied in severity when a builder chooses to cut corners. Arbitration is meant to settle disputes in this manner. We went through the process only to find out that the process is designed for the builder to win. Thats the issue we have with arbitration. If arbitration were fair, run by people with no interest in the matter (impartial), and the decision to enter into arbitration was agreed upon by noth parties (voluntary) then it would be a much better system.

Now please understand that the post above is only part of the story. It cannot nearly include all the details and story lines that go along with the situation we are in.

esquire99, you seem like a smart person. Lets say I did hire an attorney to review this document prior to purchase. It would not have changed the fact that arbitration in the case was mandatory. He would have explained that if I wanted to purchase this home I would have to agree to settle disputes with arbitration. What he would not have told me is that my home builder owns stock in the company that is providing the warranty adminitration. How can the party be impartial if my builder is part owner of the company required to provide me with arbitration?

@Snowburnt,
If you make it through here to read this, if you read my previous post, I AM a builder. And yes a contract to BUILD a home can be rather intimidating. However your comment was referring to PURCHASING real estate, not signing a contract to build a house. My response was to inform you that a straight real estate transfer is fairly straightforward transaction. It's gets complicated (ie. more paper) when you borrow money to make the transaction.

They don't pay taxes on groceries or anything else that is offered on their gated communities that have movie theaters, electronic stored, department stores, etc. They get free meals and rebates at many restaurants and stores.

Most soldiers are never in any kind of danger anywhere; even when they are in a combat zone. All those bronze stars you see; yeah, they are given away like candy; diluting soldiers who actually deserve them.

All I am saying is; stop trying to milk military service to wiggle out of a contract your stupid ass got into. You don't argue against such contracts and the unjust treatment you are getting based on its fallacy and that it is a wrong against everyone, but are instead selfishly using the "how could this be done to a soldier" card instead.

But don't worry, you will jerk the patriotic tears and get your way while everyone else is stuck in the same contract your dumb ass got into.

You might want to also suggest your husband change his career if the burden is so much that you need pity for the burden. But you won't, because the benefit far outweighs the cost.

Another thing the OP might want to look into is nullifying that part of the contract in a civil court. One of the main principles of contracting is that there is a "meeting of the minds" and if the OP REALLY didn't understand that that MBA clause completely and definitively nullified her right to a court trial, she is absolutely justified in asking the court to render that part of the contract null and void.

This goes along the lines of most contracts that state (usually near the end) that "should any part of the contract be determined void or nullified, the other parts are to remain intact and in full force" or something.

But really, the MBA is the issue, so the rest of the contract should be ok... I would ONLY go forth with this if a lawyer is retained and agrees to the approach.

The OP needs to take a look at what protections may be offered due to her husband's status. There are a lot of consumer and borrower protections for Active Duty military.

She should go to her base's Legal Office and see what help they can offer based on the timeliness of the contract signature to when he deployed, etc.

Arbitration takes away consumers rights, and as importantly it takes away their leverage. When builders and warranty co's know all they have to do is stonewall til it ends up in arbitration where they're almost assured victory, they don't have any motivation to make things right or settle fairly. When a homeowner retains their right to sue, the builder and warranty co know it could end in victory for the homeowner as well as public record of the complaint. So, they are motivated to settle.

If a home buyer uses FHA or VA financing, there is a federal housing law that says they do not have to arbitrate disputes w/a warranty co. 24 CFR 203.204(g), which is in Title 24 of the Code of Federal Regulations, says "judicial" resolution of disputes must also be an option. Cornell law school has all the statutes etc or just google it, it's on many sites that contain the CFR.

There is also a recent appellate court decision in OK, Farrell v. Concept Builders, that says if a warranty was not part of the contract the homeowner didn't agree to the warranty's arbitration clause and it's unenforceable. (2009 OK CIV APP 34) Can be found on oscn.net the OK court site.

When I speak of a 'home warranty' I mean a company other than the builder that provides warranties to the builders who buy the policies. The builder buys it, gives it as a gift to the owner of their new houses, and the warranty acts as a liability shield for the builder, and a false sense of security for the homeowner.

Too many times the courts enforce bad arbitration clauses. The Arbitration Fairness Act is needed to fix a flaw in federal arbitration laws that was probably not conceived of by the authors of that law. Using arbitration in consumer contracts is rather new, and it wasn't the intent of the original law. Corporations have exploited it and it's time to stop their abuse.

So you're saying there's no way to revoke something in a contract by mutual agreement? Say it isn't so!

(Same thing with the whining about Our Litigious Society, by the way. You don't, oddly, hear about how many of those lawsuits are business vs. business. If you want to see expensive litigation, go look at a patent case sometime.)

The big difference is that both sides are on fairly even grounds when they go into the arbitration and they can negotiate on which arbitrator to use. These cases usually turn out better than Company vs. Consumer.

Esquire99 is not being attacked for failing to pick on the builder, but because of the pervasive blame-the-victim attitude. Did an OP get screwed? Hey, let's Monday morning quarterback on what they did, and if they made the slightest error or were in the least bit trusting, it's ALL THEIR FAULT and they were a moron who deserved it.

I, myself, am all for people reading and understanding everything they sign. Because I live in the real world, I am also very familiar with the ways that people are misled about contracts, or misunderstand what a contract says because they are trusting ("But the agent said that's just boilerplate!"), or because they are pressured to STFU and sign, as several posters have noted above. It's very easy to say "just walk away" when you're not the one with your spouse, a real estate agent and three lawyers rolling their eyes at you for reading 'boilerplate', or when you've been presented with a last-minute MBA clause and you've got a house already sold, movers paid and nowhere else to go.

I *am* a lawyer and it is amazing how all those Friendly People stop their chatter about oh, just sign and oh, don't worry about that provision when I tell them so. They realize very quickly that they aren't going to pull the usual BS. Most people don't have that luxury.

That is where people are, routinely, getting sidelined. They do not understand that arbitration is the last stop, instead of something you have to do *before* a lawsuit. They don't understand that arbitration is not an alternative for minor disputes, and that MBA means "even if we totally rip you off and commit fraud, too bad." They don't understand the limited nature of appeals from arbitration.

Presenting it as "oh, it's just like court, but cheaper" IS deceptive. You know this. You just don't like it because, apparently, you think civil courts are evil and consumers deserve to get screwed unless they're paranoid.

The shame here is that, despite the MBA clause, arbitration could have been avoided. Despite what Floraposte opines, it seems the house was not purposely built for the couple. Per the buyer’s statement, "The realtor assured us the defects we noticed when touring the house were ‘normal’ and would be repaired by the builder in a timely manner." Sure sounds like a recently-built house in a new development. Presuming that is the case, the buyers had the opportunity to either 1) make closing contingent upon completion of their list of repairs or 2) to avoid delay of the closing, have completion of their repairs written into the contract. Requesting from the builder a one-year, third-party home warranty to include pre-existing conditions would have been reasonable too. Regrettably, it appears the buyers were just too trusting and not sufficiently savvy.

Over the years, with its substantial resources and influence, the real estate market has stacked the deck heavily in its favor to protect its interests. Attempting to buy real property without an adequate understanding how to protect your own interests is fraught with risk. You must do your homework beforehand (there are lots of good home-buying books). Talk with recent home purchasers. Hire a real estate agent that represents you (bet the realtor the buyer referenced was the seller’s agent). Hire an independent, trained home inspector. Get all the closing paperwork at least a week in advance. Read it yourself or hire a real estate attorney to do it for you. Then, negotiate everything that can strengthen your position and get that in writing before closing. Above all: Caveat emptor!

I'm not interested in an argument about how in the Libertarian Utopia Dimension, people freely and knowledgably agree to arbitrate disputes and the arbitrators all have the wisdom of Solomon. In the real world, businesses insert MBA clauses because they know that tilts the system in their favor. They are repeat players and choose the arbitrators, who are privately paid, and whose decisions receive little review. There are no checks and balances of the sort that you find in a civil courtroom.

If arbitration is so wonderful, then we would be expecting businesses to want them in business-to-business agreements just as much as in business-to-consumer agreements. Funnily, that doesn't happen.

To most people, that doesn't translate into "You will not be able to appear in court at all, as you waive that right, and you're agreeing to be judged in a private court that depends on our repeat business."

People show up for these closings thinking that everybody is on the same page and it's just a matter of formalizing the paperwork. They don't consider that the other side is out to screw them, or that the Very Important Lawyer from the other side may be telling them an interpretation of the law that isn't, shall we say, unbiased. Add that to the pressure of "oh, you don't need to read all that, it's just boilerplate" and a lot of people sign.

When I bought my house, I had to sign a contract that I would buy the house when it was done, but there was also a clause that said I could back out if it was built incorrectly. I didn't get a loan until I closed on the house. I didn't close on the house until it was built, and then repaired from some of the crap work that went into it.

I wish I had a dollar for every time I've said "No, I'm a lawyer; I'm going to read this before I sign it" and had the realtor/salesperson/office clerk slink back under their rock.

I understand that this contract would hold up against real estate law... but is there a loophole that would allow you to apply tort law (negligence)? Definitely worth hiring a lawyer and researching case law.

I'm in agreement with your overall point of "read before you sign, if you aren't sure what you're signing get a lawyer" and I think you are being attacked largely for being insufficiently hostile towards the builder in question.

However, I take exception to the statement above. Arbitration is not 'by definition' impartial. Arbitration in and of itself is neither biased nor unbiased, it's a process with a wide variety of possible implementations. The implementation of that process is what makes it impartial or not.

One might make the argument that being mandatory makes it inherently biased though I'm not convinced that's so.

I strongly suspect that there are many builders who specifically choose arbitration companies based on their track record of deciding for the builders, and in fact there have been court cases on just this issue I believe. That doesn't mean all contracts with MBA are entered into in bad faith by the builder, but certainly some are.

I also agree with you that an appropriate solution would be some sort of system whereby the builder has no control over who the arbitration company is and the arbitration company is selected without regard to their prior record of deciding for or against builders.

Are you tired yet? I sure am, that was a tremendous leap in logic. The substantiation that I ran into on the way bruised my shin. Maybe I'll sue...oh wait...MBA!

Just because the literal definition of MBA reads: "The submission of a dispute to an unbiased third person designated by the parties to the controversy, who agree in advance to comply with the award-a decision to be issued after a hearing at which both parties have an opportunity to be heard." does not change the reality that the arbitrator is, more often than not, essentially on the company's payroll and will more often than not side with the company. Why?

I'll give you that there's a strong chance that more people who have no case will pursue arbitration rather than sue the company because it's cheaper and therefore easier to them.
Other than that would you bite the hand that fed you? We've had stories where when an arbitrator sides with the client too often a company will get a new arbitrator. Wouldn't you? Sure it's unethical, but the whole reason to do this is to save money, right?

@mythago: I won't cite any dictionary sources as you'll likely bite my head off; but Arbitration inherently means the decision will be rendered by an impartial adjudicator. You don't need to say "the decision will be rendered by an impartial decision maker agreed upon on by the parties" as that's the inherent nature of arbitration; it's part of the very definition. The fact that arbitrators are often biased against consumers is a problem in the implementation of the arbitration system, not a problem with the nature of arbitration itself (arbitration does have many valid uses, management/union disputes and landlord/tenant matters are two areas where arbitration is often used to good effect)

Regarding the representations of YOUR real estate agent, you're right. You should trust what they say if they are YOUR agent. At that point, the agent is supposed to be working for your best interest. If it's the sellers agent, they're supposed to be working for the seller's best interest, not yours.

Further, I don't see how there was misrepresentation in the example you give (""oh, this just means that we can resolve any disputes more cheaply than in a lawsuit"). The contract says "You agree to MBA", and if the buyer asks "What does that mean", I don't see how the seller is obligated to give a cynical definition of MBA. If they give a quick "It's out of court dispute resolution that is less expensive than litigation", I can't even conceive of how that is bad faith. I gather that for you, for it to not be "bad faith", you'd expect the seller to say "Oh, that's just another way we plan to screw you". You also seem to think that simply including an MBA provision is misrepresentation.

In this case, they obfuscated their intentions of using arbitration to get out of using cheap materials and an inexperienced, unprofessional builder to save money on the construction process and legal fees. As evidenced by the quote in the title.

Great question! We have a 2-10 warranty on the house! With this warranty the builder is allowed to repair the defects OR offer a reasonable amount of money. The $2600 was not reasonable amount of money, we filed a compliance hearing, he was found to be non complaint. The builder has not made contact with us since 11/2008. He is NOT going to repair my house and his low ball sub contractors will not return our calls. This is the game they play. You fight and fight, you get an award BUT, the houses DO NOT get fixed. Past the compliance hearing there is really nothing left we can do. Not a sole can make him repair our home.

You don't know anything about what the OP's agreement said or what was represented to her about the arbitration clause. A lot of people believe that when their real estate agent says "don't worry, this will be repaired in a timely manner" that OF COURSE it will be, because people aren't dishonest and out to screw you all the time, right? And if you've ever actually been presented with a large contract to sign, you may well have had the experience of being hassled to just hurry up and sign because it's "boilerplate".

And it's funny, but the purchase agreement *we* signed for our home had a big, bold disclaimer and warning over the MBA provision and required our initials next to it. I guess that's just paternalism run amok.

As for a legal dictionary, you go ahead and bring Black's to court some time to argue that your definitions are right. The lawyer you eventually have to hire won't appreciate it, but maybe you'll learn something, such as the fact that bad faith does not simply mean "dishonesty", but has a specific legal meaning depending on the context. When you misrepresent the terms of a contract to the other person, or make oral assurances that are false ("oh, this just means that we can resolve any disputes more cheaply than in a lawsuit"), that's probably bad faith.

I wouldn't. Quit generalizing.

AHA!!!! It's the insurance companies!

Evil as ever!

@jasonof2000: I suspect that you and I have very different expections of what constitutes "very thorough."

I only have experience with home inspections in three states, but in all of those cases the home inspectors: 1) Have a small fraction of the expertise required of professionals like architects and engineers. 2) Face licensing requirements roughly equal to those of a general contractor, but far less than those of high-skill trades like electricians, plumbers, and HVAC techs. 3) They are never tasked with, or even allowed to do, the type of invasive investigation that would reveal problems like water infiltration that would lead to mold growth and rot.

Myself, I would never buy a newly constructed house unless I or someone I trusted was able to observe construction at critical points in the process. Inspection or not, there is just no other way to be sure the house was put together properly. If I were buying an existing house I would look for something at least 5-10 years old. That way I could have a reasonable certainty that any construction defects have manifested themselves in a way that would be detectable by visual inspection.

@jasonof2000: Inspections don't always work. My parents paid for a pro to inspect their house before they bought it. He mentioned things like cracked walkway stones and some damage to the siding, but failed to mention that they DIDN'T HAVE A FOUNDATION. The basement was concrete-walled, and there was a concrete surface on the downstairs patio, but just rock under the house itself. Finished basement, so it wasn't immediately obvious. Came as a pleasant surprise when the joists rotted out from under one of the bedrooms. And what could they do about it? Nothing. Why? MBA clause.

@Esquire99: Most MBA clauses I've seen claim that the arbitrator is "impartial". You yourself have admitted that is not the case. Is it bad faith yet?

*Learn what that legalese means so you can reduce that contract's gibberish into something approximating plain language. (Law for the Layperson, Legal Writing)

*Learn just enough accounting principles so you can balance a checkbook and reconcile a credit card statement. (Personal Finance, Basic Accounting)

Just saying...

It's all moot anyway, since these cookie cutter builders do not use architects and there is nobody around during construction to represent the owner's interests.

When you pay a flat fee to one of these builders for a home, they take on the role of a vendor. The problem is that the product you are buying is not available to evaluate until it is too late.

One of the architects main responsibilities is to represent the owner's interests during construction. If these kinds of problems are found before final payment, the owner has $ to hold over the contractor's head to fix it.

Especially when you are buying a house, if allowing a MBA worth the risk?

And while I agree that it's wise to have a lawyer, I'm not going to play the game of "I'm smarter and better than anyone who didn't have a lawyer and got screwed" that Esquire99 loves so well. There are a lot of people in the world who DO NOT go around thinking everyone is out to to screw them, who DO believe that if the home seller says "don't worry, binding arbitration just means if we have a dispute we don't have to sue each other" that she's telling the truth, who DO think that "arbitration" means "just as fair as a court, but cheaper".

Writing a contract that favors you is very different from being deceptive about the fact that it favors you, or from relying on the other party's misunderstanding or lack of sophistication.

@should_be_working: +10

@Mary Marsala with Fries: Are you saying you put the same amount of thought and effort into buying a cell phone as you would if you were buying a house? They're not at all analogous situations; buying a home is the largest financial committment an average person will make in their lifetime, you're choosing to talk about a cell phone instead of a home to make esquire's point look ridiculous. Most would consider consulting a lawyer before purchasing a piece of real estate to be common sense. At a bare minimum the lawyer could have explained what mandatory arbitration entails so they could make an informed decision (as clearly they had no idea what they were agreeing to) and could have provided consultation throughout the arbitration process as well. It would be nice if everyone was looking out for each other and deals could be made with a simple handshake, but that's not the world we live in; sometimes you just NEED a lawyer.

Thats the problem with this country. Do you suspose the builders had that included in the contracts because they were aware of their crappy work? What protection do buyers have in this circumstance? You pay XXx amount of dollars for a newly built home to what? Fight with the builders because they included a clause to protect their lazy unprofessional asse$ from any shotty work.

This is legal robbery right here.
im amazed at who hired the arbitrator too.
What ever happend to common sense? Its all about greed now.

Basically, a rights-waiver-waiver (rights-reinstater?) that you hand to the seller to sign. It's sole purpose is to negate any binding arbitration clauses in the contract.

Boilerplate contracts suddenly become just fine to sign, as long as the other party agrees to sign your contract in return.

It could be sold for a reasonable fee--there's plenty of homeowner's who wouldn't mind spending $20 to protect their rights.

Here's a thought for you: Companies write contracts *under the expectation that their customers will sign them WITHOUT legal representation*. (How many people ever bring a lawyer to buy a cell-phone? If you did, would the salesperson be okay with that? Does the person selling you something even have the right/ability to modify the contract if your lawyer says so?)

Given those facts, it is obviously incumbent upon THE COMPANY to write a contract that their customers can reasonably be expected to read, in the amount of time it usually takes to complete a sales transaction. (I have a college degree and while I *could* read and understand an entire cell-phone contract (assuming that the salesperson understood any legal terms of art therein and could explain them to me if I didn't know them -- and do you think that's ever true?), it would take most of an hour at least -- and again, if I DID read it and objected to the arbitration clause, could or would the salesperson or a manager change that for me?)

If companies want to write contracts that only a lawyer could understand, then they should foot the bill for their customers to hire a lawyer to read them. Oh, and make it possible to have the contract changed if the lawyer recommends it.

The fact that they'll do neither of these things, yet try to blame their customers for "not reading the contract", shows that this is a case of obvious obfuscation and deliberate sneakiness.

In other words, these people are NOT AT FAULT; you'll have to go find some homeless people to blame for their condition or something instead. Sorry to ruin your fun.

@hegemonyhog:

"We effectively have a system of microtransactional private law in the United States which turns the majority of our economic decisions into abrogations of our rights."

This quote rocks!!! I haven't heard/read it any better...

@mizike: Aah, I posted this before I noticed Esquire99's massive comment thread below. Apparently people are of the opinion that it's "anti-consumer" to suggest that when spending $400k on something you might want to consult a lawyer before signing a document you may or may not fully understand, also you should apparently just have the expectation that the other side will look out for your interests as well as (or even at the expense of) their own. Who knew?

Why can't you sue the arbitration company for failure to uphold their contract - I am sure there is some language in that fine print or in the law (shaky as it is) that requires them to duly consider evidence, etc.

@rainbowsandkittens: This is why you need your own lawyer when purchasing a home. It boggles my mind that people routinely enter into the biggest financial committment of their lives without even rudimentary legal advice. Hiring a lawyer when purchasing (or selling) a home should be a no brainer; and if you're worried it will up the costs, I can guarantee* your legal bills will be significanly less than what the realator charges you.

*not a guarantee but nonetheless true 99% of the time.

THE PAPER WORK WAS SIGNED BEFORE IT WAS BUILT

THE PAPER WORK WAS SIGNED BEFORE IT WAS BUILT

I did not realize the arbitrators were hired by the companies, I always thought they were court-appointed and paid by both parties. How could they EVER be impartial if they are picked and paid for by one side solely??

And anyone else getting messed up seeing MBA used as an acronym for Mandatory Binding Arbitration? I'm getting an MBA in a month and it doesn't mean the same thing.

@sleze69: The form letter on the Fairness website sites H.R. 1237 which ONLY applies to nursing homes and has NOTHING to do with this lady's story. I am sure my congressman's staffer thinks that I am a moron or just some bored person on the internet who supports causes for no reason.

Be sure to change it to H.R. 1020.

I guess I am missing something and no one else seems to mention it:
If it's "binding" arbitration, how is it that 39 defects were approved, and the company offered $2600 rather than fix the defects? If it's truly binding, aren't they required to fix what was approved? How is it they can ignore the outcome of the arbitration? I would think that in itself would render the procedure null and void.

Anyone else notice that H.R. 1237 is a nursing arbitration bill? Will that cover ALL arbitration?

Congratulations for having enough cash on hand to buy a property. I'm sure you're suggesting that we all save up 400k to buy our own property.

Not everyone buys a home that is "plug-and-play," so to speak. My parents wanted certain features in their house - my dad is almost 7 feet tall, so they wanted higher countertops, higher showerheads, and higher doorways, among other things. When they bought their home, at the time they signed the contracts and made their down-payment, there was a plot of land with gas/water/electrical hookups, not even a foundation in place.

If the house was an existing structure that they moved in to, then I could see where you're coming from, but the way I'm reading the story, I believe they signed the contracts before construction began.

I don't feel sorry for them...

i understand caveat emptor, but how can anyone look at this situation & conclude that what the builder did was ok b/c the buyer was a little wet behind the ears.

shouldn't we be holding builders (& not just builders) liable for the work they were contracted to do? how do you justify the apparent fraud that exists in a case like this? simply b/c the buyer wasn't educated enough on the process, she waives her right to any remedy or recourse?

some believe if we were all educated consumers, these companies wouldn't thrive, but is that a realistic expectation of all consumers? & if not, why are we willing to allow these fraudsters to pollute our markets & tarnish entire industries?

imo, we'd all be better off if consumers were more educated, but absent of that, the state would step in to say, "hold on there, bucko. this isn't the type of work we allow people to get away with 'round these parts. fix it right, or we'll catapult your ass to the state line & you can try getting away with this shit on the other side (if you survive the ride). now get in."

i'd be surprised if the GC didn't lose his license on this one. selling a home with code violations is a BIG no-no in my state (which can result in loss of license & open the contractor up to civil action). i can't believe other states would stand by idly & allow this to happen.

One thing that struck me in the story; the Realtor stated that the defects were normal. Has Michelle pursued a course of action against the Realtor? The main reason for the home inspection industry has been to take away the liability from Realtors when they make comments like that one. She would have to speak to a lawyer about the specifics, but if Michelle was mislead by the Realtor, that Realtor shares responsibility.

Actually.... That's kind of the DEFINITION of bad faith.

idiot.

How is life living with your massive cognitive dissonance?

1) transfer the deed to someone else (perhaps a family member) - the binding agreement is NOT with them, perhaps restitution could be made there
2) take the realtor to court. they knowingly mislead these people, and most likely did not disclose the clauses they were signing

HOWEVER - I ALWAYS get a full inspection before purchase, and I ALWAYS get a lawyer to check out the paperwork (but then again, this is pretty standard here in Australia).

It really does suck that this family, and many others, are subject to this kind of thing. I would be talking to the building authority about having their licence withdrawn, putting a debt collector onto them for the cost of repairs, making their life hell in general.

All you need to know about MBA is that when they sue EACH OTHER, corporations prefer the civil court system.

And don't start about how it's OK to not read a contract for "small-time consumer services". If somebody posted that they didn't bother to read their Verizon contract and now they're locked in for hundreds of dollars, you'd be at the head of the line wagging your finger at them.

We in fact did have an inspection prior to closing, the items found at that time were repaired. However, what many may not understand is a home inspection amounts to kicking the tires on a car prior to buying. You can have the surface checked out but that is essentially it. To have an adequate inspection it would have required a structural engineer, almost nobody gets an engineer to inspect their house. I can assure you before we ever buy again we will have an engineer inspecting. Thank you.

I think this victimized family should do three things - first they should contact their state's attorney general's office and see what the AG's office can do. This has gone beyond a dispute, this is fraud - especially when the builders failed to build to code. Even with a contract, the AG's office has the power to intervene.

Second, she may want to contact one of the major market TV stations in her area that have bad-ass investigative teams and tell their story of the shoddy construction and the builder's unwillingness to fix it. I would make a great multi-night show and tell expose. When that story runs, that contractor may suddenly become highly motivated to fix the home.

That builder and sub-contractor all have to be licensed - this kind of crap can cause a contractor to lose their license, they should do whatever they can to find the licensing authority and seek yanking the licenses.

What I mean by that is the clause is designed to make MBA not much different or much more risky than going to court.

The problem is NO contract states: "In the event arbitration is necessary, we will choose an arbitrator who is already in our back pocket and you will have absolutely no chance of winning any case against us."

Even someone who fully reads and understands the contract would not know the key information I just said, because it isn't in there. The only way a person would know is if they researched MBA beforehand and not a lot of people do.

Might be different where you live, but in NJ a title closing agent is specifically FORBIDDEN from explaining anything of a legal nature to a buyer/mortgagor. It's considered practicing law without a license. I'm a former title agent of 10 years.

Also, none of the homeowner's horror story is considered a defect of title. The land is still there as far as the article states. The title policy doesn't cover structural defects or slimy builders/realtors.

FWIW, I agree pretty wholeheartedly with esquire99's somewhat controversial views in the third thread from the top. If people would stop and think about what they're doing rather than trying to cut corners, or if they would be humble enough to admit that an experienced local real estate attorney, (NOT your sister-in-law who is a public defender in another state!), would be a wise move, there would be fewer of these incidents.

No I did not miss that part. They still should not of signed the paperwork until those faults were fixed.

I'm not sure what home inspectors you've dealt with in the past but everyone I've known who used the VA had VERY through inspections as part of the deal to get the loan.

These people didn't use a lawyer, they placed their trust in the wrong people and got screwed. I don't feel sorry for them, military families have a lot of resources when buying a house (VA people, a JAG or the Army equivalent to look over any contract and other help) and it seems they did not use them.

Also, even where criminal penalties are provided for prosecutions for building code violations are exceedingly rare. 99% of the time, the remedy is to force the responsible party to make the work conform to the code, which often entails an inherent financial penalty.

Building code violations are both civil and criminal. Can't arbitrate criminal as the City/County/State was not a party to the contract.

Give a call to the city building inspector.

Building inspections work on the premise that the contractor and tradesmen have both the ethics and expertise to follow the code. If the contractor is an incredible f$%#up, even the best inspectors still won't catch everything. And, just as many criminals don't get caught, if a builder is intent on evading the code and deceiving the building officials they are probably going to succeed most of the time.

Finally, 'shoddy construction' can manifest itself in lots of ways, many of which aren't even addressed by building codes. In those cases, the building official doesn't even have the authority to comment on it.

Now to my mind, while what Esquire said was wasn't complete bullshit, the larger underlying issue is that there's gotta be some trust between consumers and the people who rely on us to make their living. We shouldn't have to pore over a contract with a magnifying glass and a lawyer just to make sure we're not being screwed. That we do is the issue.

[www.jcwconstruction.com]

Then lets set up some streamlined court processes that really help reduce court costs. One way to do this is to shift from the adversarial system currently used in courts, and provide for an inquisitional system alternative for consumer product and services cases (while allowing for the adversarial system if both parties elect it).

I also support allowing arbitration as an election by both parties after the case is filed, where that election is done on a document that serves no other purpose (so it can't be hidden somewhere). In case you didn't know, those TV shows like Judge Judy, are actually done legally under arbitration.

The realtor assured us the defects we noticed when touring the house were "normal" and would be repaired by the builder in a timely manner.

Defects were noted and the realtor, builder, or both, misrepresented how they would be remedied.

Meanwhile, a home inspection is no guarantee of anything. These are typically visual inspections that will not reveal hidden defects. Similarly, new construction may have defects such as shoddy flashing and waterproofing details, that won't manifest themselves until months or years after construction is complete.

Also, while I'm sure there are many conscientious and competent inspectors, they are not architects, structural engineers, or HVAC technicians. People have the preconception that a home inspection represents an ironclad guarantee of the good condition of the house and it is no such thing. In many cases, it's just the informed opinion of some guy who took a correspondence course and maybe passed an exam.

So, instead of blaming the home buyers let's place the blame where it belongs: on the builder who sold a defective house, and on the realtor who made promises they had no intention or ability to fulfill.

How about this: Businesses and contractors stop using these tactics?

"Instead, our arguments would be handled by an arbitrator - a private company HIRED BY THE HOME BUILDER."

Read - who has a vested interest in using someone who will side with them, no matter what.

That's what I was just thinking. If we don't nip this in the bud now, it could spread like zombies.

NIP IT!

Your world seems to consist of simple words that are easy to understand and people doing things by the spirit of the law.

This is far from the case. Contracts have gone from simple to more and more complex over time at first to ensure mutual understanding and agreement to the current state of contracts where Contracts are set up to ensure that lawyers have jobs and the person with less power gets screwed by a tremendously complex document that they may or may not have any chance of understanding.

Soon everyone will have to have a lawyer on retainer in order to cross the street, or better yet if they want to be able to sign their name they have to have 4 years of contract law training.

When someone is trying to get you to sign a contract they will do whatever they can to keep you from reading or even understanding your contract, it's unethical, it's immoral, it's unconscionable, but it's reality.

Off your high horse and welcome to the real world. Maybe you should do some pro bono work as legal aid to people signing contracts to see how it works.

It's easy to see how situations like this happen. During the buying process everyone is always your best friend, offering you sodas and trying to get you to let your guard down. Many prospective buyers are excited and nervous and begin to put their trust in salespeople who act like friends and allies and are supposed to be the professionals who guide you through a milestone life event. In reality, new home construction should be met with the same level of caution as car buying. The builders, salespeople, mortgage lenders and their lawyers are just as sneaky. And once you sign, you're on the hook for a whole lot more than the price of a car with a shockingly smaller (aka: nonexistent) warranty.

Still no reason not to get the home inspected before they sign any paper work. On something that big and expensive they were stupid not to.

Well, I don't know if Michelle will read this, but writing from Watertown, NY, home of Fort Drum's 10th Mountain Division, I hope everything works out for her.

It's true that when you buy a house it's supposed to be "a place representing security, stability and safety for our family," just as she said. There are a lot of programs offered on base and throughout the surrounding communities to help foster those feelings of community and stability in this unstable time of extended deployments. Make the most of them, and you can really make the most of your stay in Watertown.

Again, I really hope everything works out for you in Georgia, but you'll love the North Country. It's beautiful here!

@Esquire99: If you were their lawyer, would you have told them not to sign the binding arbitration clause? Just curious.

In this case, the home builders apparently did not live up to building codes which should automatically invalidate the contract.

The first is the implementation itself. If you don't agree to it, you're virtually powerless to do anything about it. Unless a large demographic stops doing business with companies that employ MBA, it's not going to stop and the average consumer is essentially forced into accepting MBA.

The second pertains to the abuse of the MBA system. Large companies are essentially circumventing civil and criminal law using MBA as a shield.

It's probably easier to get stuff like that agreed to when you're buying from an individual instead of buying from a corporation or agreeing to a contract with a corporation.

This, exactly. A real estate Lawyer was an absolute necessity for us. We didn't think there was any other way. My husband and I are intelligent people, but real estate law is not our bag!

A lawyer--a good one--could have prevented some of that, I think. I feel bad for them anyway. That sucks.

If you are really negotiating something, and it's not just boilerplate, my expectation is that the LEAST the other party is going to do is want to run it by their legal department, even if the representative believes they can make the changes you want.

With something like removing a binding arbitration clause, I'd be surprised if anyone who regularly includes such a clause would be willing to forgo it under any circumstances. They understand how arbitration limits their exposure to lawsuits, liability, and the law in general, which is why they are in favor of such an arrangement.

More importantly, how can I use binding arbitration to my advantage to get out of speeding tickets, or beat a murder trial, or force someone to take my cat?

I agree but since the they already bought the house would they become responsible for code violations ? Or perhaps it would be a good idea to bring an inspector out for the stuff they won't fix since the arbitrator apparently already agreed to some code violations .

I'd also call local code enforcement to see they actually did fix any existing violations or gigs .

I hate to say if but this is just another example of a business/homebuilder that is more worried about their contracts than their actual product .

The builder should suffer for the shoddy handiwork. However, the city's building inspectors should be on the hook as well. It is their job to make sure that the building plans were followed. For every evil capitalist, there's a government entity enabling the action.

@Esquire99: When I bought my house (existing home, not a newly-built one, not that it makes a difference in the procedure), one of my upfront expenses was for the real estate lawyer. You are absolutely correct as to the need for a lawyer to review anything and everything before you sign it. If the lawyer says "hey, this isn't good - get rid of it" and the other side won't, then don't do the deal.

6 P's: Prior Planning Prevents Piss-Poor Performance. A good rule to keep in mind.

All this being said, the builders still appear to have done a piss-poor job of building the home.

A whole lot more people are going to get burned on this before it gets the shit-canning it so richly deserves.

A house sale might have some leeway...but of course these jokers won't do the deal without the arbitration clause.

The binding arbitration should have been explained to them by the closing agent.

There just doesn't seem to be much quality control from the builder's side, you have to force it upon them, and not everyone has the time, inclination or experience to do that. One item I brought up repeatedly was ignored for weeks until I told the construction supervisor that if he thought I'd just forget about it and go along if he put up the sheetrock before he moved the plumbing and outlets for the washer and dryer to the appropriate sides (per the plans, that would fit the way the doors on my front-loader washer and dryer open) he was sadly mistaken and I'd make him rip out the sheetrock and correct it before I closed. Interesting enough, it was corrected the next day when I came by to inspect after work.

Since they are a military family it is safe to assume they used the VA loan which from what I understand means the house has to be inspected before closing.

I'd just like to know before I go ahead and try this on my next contract...

We effectively have a system of microtransactional private law in the United States which turns the majority of our economic decisions into abrogations of our rights.