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Their story is compelling. I can't imagine what it's like to buy a house and have it be riddled with defects and have little/no recourse. However, when you're spending hundreds of thousands of dollars on a house, there should be no such thing as \"sneaky\" language in the contract. If you're not competent enough to thoroughly review the contract and notice problematic provisions, you need to hire a lawyer to review it and make you aware of any relevant provisions that might be problematic. \"I didn't read the contract\" is a piss poor non-excuse that will generally get you nowhere. This isn't a cell phone or cable service; it's a freaking house. For crying out loud, how do you drop that kind of cash (or take on that kind of liability) without knowing what you're signing? I realize it can cost $1k to get an attorney to review the contract, but fuck....this stuff is just absurd. When will people learn that it's REALLY important to read and understand what you're signing? I'm amazed how many people think it's OK to just sign and hope it's all good, then bitch up a storm later when someone says \"Well, it's on the contract that you didn't read\".
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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?
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@Everybody in this thread so far:
Can't believe I actually read this entire thread-within-a-thread. Good debate.
So far, there are largely two sides: the idiot consumers should read the fine print crowd and the all companies are run by criminal syndicates gang.
There is truly only one reasonable response to an issue like this, especially in a country like the US where caveat emptor is the law of the land...
Educate yourself!
A good part of any public skool reform should be \"Real Life 101.\" Kids have got to know this stuff before they enter the real world. All of us should try to mix in some community college courses or at least a \"for Dummies\" book on these topics. I have to think that all of these horror stories could have been avoided with some education.
*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...
@PencilSharp:
Excellent points. I totally agree that many of the problems related to contracts, etc. result from poor education. The education system doesn't teach people ANYTHING about this kind of stuff, which to me seems like a failure. If you can't come out of high school with a basic understanding of how the world works, I think your school failed you.
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@Esquire99: Oh my god, you actually managed to say \"gee this is a completely egregious case, but I'm going to blame the victim anyway\". Wow.
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.
@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.
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@mizike: The reason you don't bring a lawyer to buy a cell phone is that there is no negotiation. Cell phone companies write adhesion contracts. If you cross out the MBA provisions in your cell phone agreement, you don't get a phone. Doesn't matter what your lawyer says.
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\".
@Esquire99: As you have pointed out, you are not a lawyer. So running to Black's Law Dictionary to try to argue what 'bad faith' means is ridiculous. I'm not a programmer; I don't try to explain how C++ works by running to an O'Reilly guide and reading out of the glossary in the back.
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.
@mythago:
So what you're trying to say is you believe it's incumbent upon the seller to explain to the buyer each and every term in the contract? Writing in an Arbitration clause isn't sufficient on its face, you want the seller to say \"Here's what this means\". What about all the other words in the contract? Do they need to explain all of those to? At no point is the seller allowed to assume that the person signing the contract knows what it all means? Maybe it's necessary to explain that where it says \"You take possession on July 4th\", the seller should explain what possession means. Perhaps before the buyer signs where it says \"You understand and agree to everything in this contract\", the seller should say \"Oh, wait. Now, do you REALLY understand everything it says?\" Come on, the level of paternalism you expect is unreasonable. As was stated above, we don't live in a world where everyone looks out for one another. Everyone is out for themselves, and the consumer would screw over the seller if given the opportunity. Finally, I'm not sure why you think looking up a LEGAL term in a LEGAL dictionary is odd. Is it because it proved you wrong? I'm sure you would have been all for it had it proven you to be correct.
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@Esquire99: It's incumbent on the seller to not obfuscate their intentions in the contract.
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.
@snowburnt:
That's quite a leap in logic with basically no substantiation. The quote given doesn't indicate that they do that so they don't get sued for doing shitty work. It's a general quote re: their aversion to lawsuits. It could mean that they do it just to avoid getting sued generally, given that our society has become incredibly litigious. I also refuse to accept that simply including a MBA clause obfuscates anything. All it means is that you have to go to arbitration, not court. There is nothing inherent in the definition of MBA that means \"company wins, consumer loses\".
@Esquire99: \"You can't afford to fight us\". What do they do? They build houses. Why would someone fight someone who builds houses? Because they did something wrong building the house.
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?
@Esquire99: So what you're trying to say is that if somebody believes they understand a contract, clearly they should have assumed they were idiots and that the other side was out to screw them?
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.
@mythago:
Black's Law Dictionary is a reputable source for a quick definition of a particular word. Obviously the level of research I'm willing to perform for a comment on here is far less than what I would do if I were going to court. Misrepresentation of the terms is probably bad faith, but you don't provide an example of misrepresentation. You provide an example of explaining a term by its general definition. You also don't know anything about the OPs agreement, so you can't really argue that there WAS misrepresentation, yet you certainly have implied it.
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.
@Esquire99: It's in bad faith because the definition does not include \"And you are giving up your right to file a lawsuit in court.\"
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.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-488475-100x100.png\")
@Esquire99: \"Everyone is out for themselves, and the consumer would screw over the seller if given the opportunity. \"
I wouldn't. Quit generalizing.
@Esquire99: You should really change your name to \"Devils Advocate\".
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.
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@snowburnt:
I've done dozens of real estate transactions with cash, and they are amazingly simple, 4-5 pages in most cases. The stack of documents most people get when they buy property are for the loan, not the actual real estate, the only exceptions would be CC&R's for an HOA.
@Sudonum: Have you hired a contractor to BUILD the house? Do you have any idea how complicated a transaction that is? 90% of the time they're going to be off on their estimates and both sides have to cover their asses. This case makes it even worse because it's a third party doing these transactions en masse.
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.
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@Sudonum: If you actually READ a binding arbitration clause, it actually sounds very reasonable. Most clauses point out that the arbitrator is (intended to be anyway) impartial and award any damages or compensation a court could.
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.
@dragonfire81:
Here's the thing that bothers me about the whole anti-MBA thing. Many people assume that the bias is actively encouraged by the company, like they're telling the arbitrator \"Hey, decide in our favor or else\". That probably rarely, if ever, happens. The problem with MBA as it's currently structured isn't that the arbitrator is necessarily \"in the corporations back pocket\", but that there is a structural bias that creates an inherent conflict. The arbitrator knows they are hired and paid by the company, so there is an inherent pressure to decide in their favor, regardless of whether the company actually wants to \"influence\" the arbitrator. You make it sound like it's an elaborate scheme that involves the companies plotting directly with the arbitrator. It's nothing more than a structural bias that could be eliminated by a change in the way MBA is actually administered, essentially removing the companies ability to choose the arbitrator.
@Esquire99: It's not structural bias, it's actual bias. First, the companies are 'repeat players'. You or I might be in arbitration once, ever; these companies are in there all the time and know all the routines, the paperwork and which arbitrators tend to favor them. Second, because arbitration firms are privately paid, they aren't going to get a lot of business if companies perceive them as \"pro consumer\".
All you need to know about MBA is that when they sue EACH OTHER, corporations prefer the civil court system.
@snowburnt:
I tried to confine my point here to a contract to buy a house. I'm willing to accept that many contracts have gotten overly complex (particularly those for cell-phones, etc.), but when it comes to a contract to buy a house, you're an idiot if you don't hire a lawyer to look it over. There are laws, or at least general doctrines, that protect people from adhesion contracts, like cell-phones, etc. When it comes to buying a home, there is simply no excuse for not reading and understanding, or having someone who is on your side explain, the terms I agree that it's unethical to try to keep someone from reading the contract they are about to sign, but I think it takes a pretty dumb person to say \"Ok, I won't bother reading it because you told me not to\".
@Esquire99: Anti-moron? very clever. RTFA They read the agreement, it sounds nice and pretty. if you have a problem it will be handled quickly out of court. by an arbitrator we hire and is catering to our wants and needs
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@Esquire99: What if every builder puts a binding arbitration clause in their contract? All the understanding of the contract in the world doesn't help then.
@Eyebrows McGee (on Twitter: LPetelle):
That's what I was just thinking. If we don't nip this in the bud now, it could spread like zombies.
NIP IT!
@Eyebrows McGee (on Twitter: LPetelle):
Then you either buy a pre-owned home or you suck it up and sign. There are options.
@Esquire99: I'm surprised that the issue of \"code violations\" doesn't give them a right to sue. I'm fairly certain that if you have code violations in NYC you have major problems if you try and transfer the deed. Forget about getting a C of O.
@Drew5764:
You have to remember that NYC has some of the strictest housing laws in the country. Many other cities/states have incredibly lax statutes and enforcement.
@Esquire99: There's two ways I read into Mandatory Binding Arbitration.
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.
@PlanetExpressdelivery:
Companies aren't circumventing anything. At best, they're circumventing the civil system. MBA doesn't affect the states ability to criminally prosecute. Either way, MBA is currently a legally acceptable alternative to the court system, so I don't agree that they're circumventing anything. They're simply choosing a different route that, in theory, offers dispute resolution in a faster and cheaper form than full-blown litigation.
@Esquire99: \"Companies aren't circumventing anything. At best, they're circumventing the civil system.\"
How is life living with your massive cognitive dissonance?
@PlanetExpressdelivery: Exactly. MBA is used to get out of the oversight of a neutral judicial system, and into a private court system where the companies own the judges.
@Esquire99: Oh, for crying out loud. How about a little blame for the companies who sneak this crap into the contract, and then try to persuade people that it's no big deal?
@mythago:
\"How about a little blame for the companies who sneak this crap into the contract\"
I am a small builder, my liability insurance carrier requires me to include a MBA clause in my sales contracts. If the buyer wants it removed I have to refuse the sale. And yes I've searched for other carriers. It's not that easy, or cheap.
@HogwartsAlum:
It actually makes sense that the insurance companies require MBA clauses. They are frequently the ones footing the legal bills if the basis of the suit would be covered under a various policy held by the seller. It's in their best interest to keep the costs down, and they see MBA as an effective way to do that.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-776577-100x100.png\")
@mythago: That's not Esquire's bag. This commenter loves to passive-aggressively sneak anti-consumer snark into his or her posts.
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.
@Cyberxion101:
First off, I'm not anti-consumer. I'm anti-moron. Unfortunately, many consumers, and the problems they have, come from their own stupidity. There are a lot of people that simply get screwed regardless of their efforts at protecting themselves. I feel bad for those people and they deserve to be prominently featured on this site, and deserve justice. People that get boxes of rocks from Best Buy come to mind.
As for the contract issue, most of it doesn't even come down to needing a lawyer to read over it for you (though when buying a house, that's clearly what I'm saying). Most people simply don't read contracts at all. That's inexcusable. I certainly don't expect everyone to be able to read and fully understand complex contracts, but it's still inexcusable to simply not read it at all and then complain later. We're not talking about anything ultra-complex here. To many peoples' dismay, many contracts are plain-language enough to get the gist of what it's saying without needing legal training, but only a basic grasp of the english language. They aren't written in a foreign language; they're written in english. Again, many people simply don't read them at all and then are shocked that some clause they claim they never would have agreed to was in it.
I recognize that many people, myself included, don't fully read everything we sign. However, that's simply a cost/benefit decision that we make. One determines that it's not worth their time to read the contract. Occasionally, that comes back and bites you in the ass. It's like gambling; sometimes you lose. But you can't have it both ways. You can't refuse to read contracts because you're too busy/important/stupid and then bitch later when the company says \"hey, you signed this, it was in there\".
@mythago:
I MIGHT buy your argument when it comes to small-time consumer services, like cell-phones and internet service. When it comes to purchasing (for most people) the largest item they will EVER purchase, not reading and fully understanding the contract is simply inexcusable. For the vast majority of the population, a real estate attorney is an absolute necessity for purchasing a house. Some people try to skimp and not hire one, and they get bit in the ass when stuff like this comes up that they claim they didn't know about. Simply inexcusable to not read a contract that you're signing to buy a house, no two ways about it.
@Esquire99: You like that word \"inexcusable\". What is \"inexcusable\"? Failing to pay an expensive attorney to read a document you think you understand, when you believe everybody else is acting in good faith?
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.
@mythago:
I didn't say it was \"Ok\" not to read those kinds of contracts. I said I understand it happens, but that it's a risk people are willing to take because the stakes are small. And you're right, I'd absolutely be blaming them if they wanted to complain about being locked in because they chose convenience over reading the contract. It's all cost-benefit.
And I'm sorry, when you're conducting a business transaction, everyone is out for themselves. Including clauses that are not good for the other party, but good for you, doesn't create \"bad faith\". That's simply business. The seller isn't, and shouldn't be, trying to ensure that you get the best deal. The buyer should be protecting themselves. Trust but verify is probably the best policy.
@Esquire99: \"And I'm sorry, when you're conducting a business transaction, everyone is out for themselves. Including clauses that are not good for the other party, but good for you, doesn't create \"bad faith\". That's simply business.\"
Actually.... That's kind of the DEFINITION of bad faith.
idiot.
@sinfonian94:
First off, the personal insults are wholly unnecessary. How about you grow up and learn to debate the issues, not attack the other party? Second, No, that's most certainly not the definition of bad faith. From Black's Law Dictionary, \"Bad Faith: Dishonesty of belief or purpose\". From Dictionary.com \"Bad Faith: \"Lack of honesty or trust\". It says nothing about being nice to the other side, or making sure that there's noting in the contract that's adverse to them or against their interests. Creating a contract that's good for you, but not so good for the other party isn't dishonest.
@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?
@RandomZero:
No, it's not. MBA by definition is impartial. I've also never said the arbitrator isn't impartial, only that there is a structural bias that creates a potential conflict of interest. Not every arbitrator is going to act on that interest, thus not every arbitrator is not impartial. When it really comes down to it, juries aren't always impartial either. Unless the companies has an actual agreement with the arbitrator that \"We pay you $1000 and we MUST win\", I don't think there is any bad faith at all.
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.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-49032-100x100.png\")
@Esquire99: \"MBA by definition is impartial. \"
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.
@revmatty: revmatty - we have that system. It's called \"the courts\".
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.
@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)
@mizike:
This is precisely what I've been saying, but it's like yelling at a brick wall. Mythago is convinced that arbitration is evil, and putting it in a contact without presenting statistics about how the consumer is going to lose is bad faith.
@mizike: Please explain how arbitration means \"inherently\" will be rendered by an impartial adjucator. Please explain how \"mandatory\", \"binding\" or \"adjudication\" are synonyms for \"impartial\". We're not having an ivory-tower debate about the possible nature of arbitration itself, but about the implementation of MBA clauses, because in the real world, that is the system people like the OP deal with.
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.
@mythago: I agree with everything you said except for the last part. While businesses may not have Mandatory binding arbitration they do use binding arbitration fairly often.
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.
@snowburnt: Businesses do use binding arbitration, but it is used far LESS in agreements between businesses than in agreements between businesses and consumers.
(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.)
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@Esquire99: You say personal insults are unnecessary and immature yet you called people morons in a previous post. Real Estate lawyers will often encourage you to sign in areas where everyone uses MBAs anyway. Since it is common practice it is common to see those clauses in the contracts and then you are out the money you paid for the lawyer and the money for the house. Where does it stop? Do we need to hire someone to research and find us lawyers too? The underlying problem is that even when people do everything they can they still get burned by this stuff. This consumer may have been more negligent than others that have been reported on but overall the whole thing is getting out of hand.
@Raekwon:
I didn't call anyone in particular a moron. I said I was anti-moron generally. Huge difference.
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@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.
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@nybiker: My lawyer dropped the ball, though, so there's no guarantee. (Fortunately it didn't hurt me too badly, but it was annoying as hell.)
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@nybiker:
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.
@nybiker:
Totally agree on the piss-poor job by the builders. But a little due diligence on the part of the buyer could have easily prevented, or at least mitigated, all of this.
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@Esquire99: If you were their lawyer, would you have told them not to sign the binding arbitration clause? Just curious.
@dorianh49:
IANAL. but I think with something like that, especially if you know it's a deal breaker for the other side, all you can do is make the client aware of what MBA is, how it affects their rights and what the process will be like if they have to go through it. At that point, the decision is up to them. I think the lawyers job, in that situation, is to present objective advice and make sure the client is well-informed and understands what the language means.
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.
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@Esquire99: Even if they read it many people have an (obviously unwarranted) assumption of fairness. OK, \"binding arbitration\", that sounds OK (and I suppose there is some way it could be, it just isn't).
A whole lot more people are going to get burned on this before it gets the shit-canning it so richly deserves.
@j-o-h-n:
The concept of Binding Arbitration isn't unfair, it's the current implementation of it that carries an inherent bias.
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One of the worst parts of arbitration is that it contributes to the overwhelming practice of Americans not reading contracts at all - and it's a perfectly rational response, given that most people aren't going to (and in many cases, can't) investigate a process controlled by the company you're contracting with.
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.
@hegemonyhog: \"Now sign here and here and here and...\"
\"Wait, this says 'binding arbitration'.\"
\"Well, yeah.\"
\"I'm not signing this.\"
\"Ok, there's the door. Don't let it hit your ass on the way out.\"
\"But we already sold our other home, we need to be out by tomorrow.\"
\"Sign or GTFO.\"
@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...
@hegemonyhog: I don't think most Americans understand what ''arbitration'' means. It's not very publicized outside of consumer blogs/magazines.
@hegemonyhog: I've been through three closings and two were new construction. Buyers sign about 50 forms, many of which are 2 or 3 sheets of paper each, for a total of 125-ish individual sheets of paper. Each closing has been a similar experience for me. My husband and I were greeted by the builders and the lawyers, our team: 2, their team: 4 - 6. The most intimidating lawyer would rattle off the \"this is what this page means\" speak, as if we'd just take his six word summary for gospel and sign the form quickly. At all three of my closings, always with separate closing attorneys, they have attempted to rush us through the process at a very uncomfortable pace.
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.