Monday, September 20, 2004

Special Issue: Home Building Disputes

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All Home Builders Must Register With The State

"On Thursday, December 18, 2003, the Texas Residential Construction Commission (the “commission”) held a meeting to adopt emergency rules and propose rules for permanent adoption to implement portions of the Texas Residential Construction Act (the “Act”). The rules require all home builders, contractors and remodelers in the State of Texas to register with the commission, using a commission prescribed form, and remit a filing fee of $125 on or before March 1, 2004. Within 15 days after the receipt of a complete registration form and the required fee, the commission will issue to each builder, that meets the requirements of the Act, a certificate of registration."

Denied Builder Registration Page

“The Denied Builder Registration page identifies builders/remodelers who have been denied a certificate of registration because of a failure to meet the Commission's requirements for registration. These individuals or companies are prohibited from operating as a builder in Texas without a certificate of registration issued by the Commission. If you become aware that any individual or entity identified on this page is attempting to build a new home or is undertaking a remodeling project for which the cost exceeds $20,000, please contact the commission immediately at 512-305-TRCC or toll-free at 877-651-TRCC or via

E-mail info@trcc.state.tx.us.

Texas Building Energy Code Compliance Form For Residential Buildings in Unincorporated Areas
Effective Date: 9/1/2001

"Texas law, Ch. 388, Subtitle C, Title 5, Health and Safety Code, requires a new residential structure to comply with the Texas Building Energy Efficiency Standards, which use the International Residential Code “IRC” and the International Energy Conservation Code “IECC” as it existed on May 1, 2001. This form can be used to document compliance outside of a municipal jurisdiction."

Disputes between Homeowners and Builders Require Mandatory Arbitration

“Through a series of lawsuit reforms out of Austin and changes to contracts over the past 15 years, they have forced homebuyers. . .into a mandatory "dispute resolution" process before they can go to court. . . . The builders' efforts culminated last year with a bill creating the Texas Residential Construction Commission, a new agency established to resolve disputes between homeowners and builders.” . . Mandatory Arbitration clauses.” essentially require homebuyers to waive their right to sue — a right guaranteed under the Seventh Amendment to the U.S. Constitution. So far, at least, both the Texas and U.S. Supreme Courts have ruled that arbitration provisions can be enforced as long as both parties sign off on them.”

San Antonio Express, 09/19/2004

Mandatory Arbitration Clauses Undermine Consumer Rights

“A claimant must pay steep filing fees just to initiate a case.”

Bias: Since only businesses will be repeat users of an arbitrator, there is a disincentive for an arbitrator to rule in favor of a consumer or employee if he expects further retentions.” Studies have shown that arbitrators rule in favor of consumers only about 20% of the time.

Limited Discovery: In arbitration, discovery is a privilege, not a right, and many businesses draft arbitration clauses to severely restrict the claimant s ability to obtain necessary evidence. Moreover, since arbitrators do not have the power to enforce subpoenas, claimants must sometimes file lawsuits to get compliance defeating the purpose of arbitration.”

Prohibition of class actions. Nearly every arbitration clause prohibits participation in class action lawsuits.”

Inconvenient venue. Arbitration clauses often require that hearings be held in a location inconvenient to the claimant.”

One-way requirements. Most arbitration clauses require only the weaker party (the consumer, employee, or franchisee) to arbitrate its claims, while allowing the dominant party (the corporation) to sue in court on its claims.”

No public record. While proceedings and records of the courts are open to the public, most arbitration clauses and provider organizations require that proceedings be kept confidential.”

“Limited judicial review. Parties are allowed only limited judicial review of an arbitration award. A decision may only be overturned when there is fraud or "manifest disregard of the law." This is a high hurdle, because arbitrators need not issue written findings of fact or legal conclusions. Oddly enough, courts will refuse to hear appeals of arbitration decisions even when both sides have agreed to let a court do so!”

Excerpts from a Public Citizen article at:

Mediation Versus Mandatory Arbitration

What’s the difference between mediation and arbitration? In mediation, the mediator has no authority to render a binding decision, nor can mediators force the parties to come to any agreement. Most often, the disputing parties usually come to collaboration and/or a compromise agreement, which they make enforceable through a binding contract.

In arbitration, a third party decides the final outcome and imposes it on the parties. The Arbitrator, who often has repeat business with the business that is in dispute with the consumer, makes the final and binding decision. Both parties are usually left rather unsatisfied. According to the NAR Arbitration Work Group, "Arbitration is by nature a somewhat confrontational, adversarial, 'win/lose' process. Non-prevailing parties remain convinced of their entitlement; prevailing parties resent having to participate in arbitration to be 'awarded' what they view as rightfully theirs."

What is the usual end result? In mediation, the result is most often a mutual agreement that both parties tend to keep. Because mediation is a non-adversarial process, all parties most often see it as a “win/win”. In arbitration, the result is always win/lose. And the consumer only wins about 20% of the time!

Article by Barbara Sowell, Texas Mediator

Strike Out and Initial Binding Arbitration Clauses

Whenever possible, strike out the binding arbitration clauses and substitute “mediation” in the contract you are about to sign– then initial your changes. They may not like what you are proposing, but if they want your business, they can be made to see the light. I did it a couple of years ago when I was trying to get my mother into an assisted living center in Arlington. The binding arbitration clauses ran on for a couple of pages and even listed their chosen arbitration firm – in Florida. The company headquarters was in Florida. If a dispute had arisen, I would have had to travel to Florida! Imagine that cost!!! I sat in the administrator’s office where I negotiated this change long distance with their company attorney in Florida. I prevailed. You can too! After all, they want your business.

Article by Barbara Sowell, Texas Mediator

Low Cost Mediation in the North Texas Area

Did you know that any individual, group, association, or company can obtain a mediation in North Texas for around $35.00 per party??? Where? At Dispute Resolution Services of North Texas.

“DRS provides low-cost, professional mediation services to Tarrant and Parker county and surrounding communities. The agency performs more than 80-100 mediations each month, successfully settling approximately 65% of these cases. Any individual or attorney may request our services directly; a court order is not necessary. Upon receipt of the Request For Services Form and the appropriate fees, DRS will assign a case manager to handle the administrative details -- scheduling the mediation session, sending confirmation letters to parties or their counsel, and advising the court of the outcome of the mediation (when required or requested).”

Call 817-877-4554 or e-mail DRS at drs@drstarrantco.org
Visit their Web site: http://www.drsnorthtexas.org/index1.htm

A list of County Powers and Duties Modified by the 78th Texas Legislature, 2003


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