Before You Sign an Arbitration Agreement, Read This

by Alex Stenback on August 22, 2007

Arbitration
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Among the myriad disclosures a home buyer is asked to sign when purchasing a home (which may or may not include a diagram of the digestive system of a badger) is an addendum regarding arbitration.  This is where one can decide whether to settle any claims (seller hid or did not disclose a property defect, for instance) via binding arbitration, and forego the right to bring anyone to court.

Now, to the casual observer, arbitration sounds OK, and it is mostly described to home buyers this way:  Arbitration is conducted by a neutral third party who will sit everyone down and come to a fair decision, avoiding all those messy, costly, and time consuming lawyers, and courts, and whatnot.

So what are the risks then, in signing an arbitration agreement?  Behold Jordan Fogel whose ordeal (chronicled in detail at Consumerist) with a builder and the arbitration process got so bad that she was invited to testify before congress earlier this year.  From her testimony:

Arbitration is an atrocity; and until
you experience it or see the aftermath of its devastation, you cannot
even imagine. Yet, some people still believe the "spin" that
arbitration is as fair, cheaper, and faster than going to court.
Arbitration is not fair; it is not cheaper; but sometimes, it is a
whole lot faster. I have known people who were filed on by their
builder, shoved through "fast track" arbitration; and came out the
other side in less than 90 days owing the builder money
Arbitration companies will tell you don’t need to have a lawyer, but the builders have a stable of them.

Many more great links and info over at the Consumerist. A must read.
Tremont Homes Sells Rotten Lemon, Provokes Victimized Homewoner into Five Year Consumer Crusade [Consumerist]

{ 1 comment… read it below or add one }

Steve Dibert October 22, 2008 at 7:46 pm

This is an interesting article. I’m going to have to bookmark it.

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