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CONSUMER ADVOCATES STUDY WARNS OF THE USE AND ABUSE OF ARBITRATION IN NEW HOME CONTRACTS.
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Added: 01/02/2004
Type: Summary
Viewed: 741 time(s)
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CONSUMER ADVOCATES STUDY WARNS OF THE USE AND ABUSE OF ARBITRATION IN NEW HOME CONTRACTS.
Homeowners Against Deficient Dwellings (HADD), a national non-profit consumer advocacy organization has released a new study on the use and abuse of mandatory binding arbitration clauses in new home contracts. The study, "The Abuse of Binding Arbitration in New Home Contracts. A Consumerıs Perspective" concludes: "Contrary topopular belief, arbitration is a private, profit motivated justice system forced upon new homebuyers, and is abusive, extremely costly, grossly unfair and provides no tangible benefit to the homebuyer."
The vast majority of new homebuyers blinded by low interest rates and the excitement of owning the American dream do not realize they must give up their American rights to a trial by jury in case of a serious construction defect. Instead, homebuilders insert generic arbitration clauses in the contract without disclosing the high cost, and the loss of the buyerıs legal rights, once protected by the 7th Amendment of the Constitution.
Much of the study is based upon testimony in two interim studies conducted by the Texas House of Representatives in the Summer of 2002. After a homeowner has attempted to resolve the dispute without legal action, they quickly learn that a suit, which could hold a builder accountable, is replaced with a costly private justice system where high costs and abuse have been documented.
According to HADDıs President and Founder, Nancy Seats, "Arbitration provides ample protection for the builder through limited liability while the homeowner is punished with extreme processing fees, and grossly unfair decisions. We hope this study will be useful to State lawmakers in understanding the limited rights consumers have when dealing with an uncooperative builder and their private justice system."
"Until the laws are changed to prohibit mandatory arbitration clauses in new home contracts, the biggest investment of your life, the "American Dream" will continue to have as much protection as buying stock in Enron." says Seats.
The full report in PDF format can be downloaded from the HADD website at http://www.hadd.com/arbitration.pdf
About Homeowners Against Deficient Dwellings (HADD): HADD, a national non-profit organization incorporated in the State of Kansas, is composed of individuals from across the country that share a common bond of owning a defective home. There are over thirty HADD Representatives in 25 states advocating for quality construction, accountability, and ensuring fair laws are in place for consumers across the country. Their website can be visited at http://www.hadd.com
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Poster: Cindy Schnackel
Added: -0/3-/2004
I am a volunteer with HADD also, and I agree with Nancy Seats comments. Almost no home buyers are aware of the real drawbacks of arbitration and for KB to thumb its nose at the FTC's consent decree is just one more example of how the laws are not enforced on these builders. Too many home buyers are finding that they have no consumer protection and no legal recourse if the new home they buy is defective and the builder won't honor the warranty.
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