Watch Out For Arbitration Clause In New Home Contracts
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New home developers sometimes ask buyers to agree to binding arbitration – a promise that you’ll go to a arbitrator instead of suing in court if something goes wrong. A binding arbitration clause might appear in your purchase contract or in the community covenants, codes and restrictions (CC&Rs).
If you sign, you’re agreeing that any dispute you may have must be settled out of court.
Arbitration can be a great way to settle disputes, if the arbitrator who hears the dispute is a truly neutral and trying to find a compromise that’s fair to both parties.
However, arbitration also can limit your options. If you don’t like the arbitrator’s decision, you may not be able to appeal it. To get it set aside, you might have to prove the arbitrator was biased or the agreement violated public policy.
Another disadvantage is that unlike the court system, there is no automatic right to discovery during arbitration. This means that the parties involved do not have to disclose information about their cases to the other party.
All of these things are also overseen by the arbitrator, another possible complication. Arbitration groups actively market their services to companies, bringing up questions of objectivity.
The arbitration clause is just one of many issues that can arise when you purchase a new home. As an experienced Realtor, I can help you with a purchase of a brand new home as well as existing ones. Before you visit any new home communities, contact me, and I can help you find different builder options that suit your needs. I can also help guide you the purchase of the new home in the same way as I would an existing home.
Modified by: Theresa Tscheschke Gunal ; Used courtesy of Dona Dezube, Home Actions, LLC
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