Arbitration Screws Homeowners
February 18, 2009, 11:26 am
Filed under: Ian

Excellent reporting by the Atlanta Journal-Constitution yesterday:

They went to binding arbitration with John Wieland Homes and Neighborhoods because that’s what their home warranty required. Builders require buyers to agree to arbitration to avoid costly litigation when conflicts arise. But the Coles say arbitration failed them. Many of the repairs they sought were rejected by the arbitrator, and the ones that were ordered almost two years ago have not been made.

Homeowners recently visited the office of Senate Majority Leader Chip Rogers (R-Woodstock) to advocate changing state arbitration law to strengthen the homeowners’ hand. Rogers said last week he’s heard only the homeowners’ side of the story and is still looking into the issue.

“It sounds as if maybe the arbitration system needs to be changed so you don’t have what appears to be a very predictable outcome in every instance,” he said.

The Coles and other homeowners believe arbitrators are closely tied to home builders, to the detriment of homeowners.

“We already knew which way it was going to go. They just showed up,” said Jeanette Martin, who lost an arbitration in Fayette County involving Morningside Homes LLC. “I think all of them know each other.”

I hope that Senator Rogers decides to join the fight against homebuilders who think they can use binding arbitration to ignore the law.  Sadly, however, it is unlikely that he can do very much.  The Supreme Court has held that states are almost completely powerless to fight back against abusive arbitration clauses—only Congress has the power to end this practice.

It sure would be great if someone in Congress introduced a bill to restore accountability to companies like John Wieland Homes and Morningside Homes.  A kind of Arbiration Fairness Act, if you will.


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