The Subcommittee on Commercial and Administrative Law
“Mandatory Binding Arbitration Agreements: Are They Fair For Consumers?
Foreclosure rates are in the news almost every day, but bad builders and arbitration clauses don't make the news. The majority of us have no voice. We are threatened with arbitration, and most are confused and afraid. Some homeowners patch up their new houses and dump them on the next unsuspecting buyer. Some houses in my neighborhood have had as many as five owners. Previous owners are being sued by new owners. We can sue each other for non-disclosure, but the builders are above the law.

Arbitration ties consumers' hands
Unhappy customers used to threaten, "I'll see you in court!" That often won't work anymore. These days, consumers are increasingly forced to resolve disputes via mandatory binding arbitration. Unfortunately, though many people now are covered by binding-arbitration agreements, most don't know what they are, how they work, when they come into play or who would decide the fate of their complaints. Businesses love binding arbitration. For them it's a faster and cheaper way to settle disputes and a great way to generate debt collections.

Card Check: Binding Arbitration Invites Trouble
More excellent work comes from the Heritage Foundation's James Sherk on the spuriously named Employee Free Choice Act... Congress should reject the idea of forcing workers into binding arbitration because it would put millions of American's retirement security at risk. Unaccountable government arbitrators could force newly organized workers into severely underfunded multiemployer pension plans. Employers' retirement contributions would shore up union finances, rather than provide for their workers' retirements. It is understandable that unions support binding arbitration, but Congress should not give into their demands.

Colorado Senator Veiga Discusses Homeowner Protection Act
Home buyers deserve a threshold of basic legal proteections, according to Senator Jennifer Veiga (D-Denver), and a new measure introduced in the House will give homeowners the legal foundation to protect themselves against predatory home builders. House Bill 1338 will enact the Homeowner Protection Act of 2007, making it illegal for home builders to force or coerce buyers into signing away their rights. The Homeowner Protection Act will restore the rights of home buyers, by making these waivers illegal. "This measure is pro consumer," said Senator Veiga. "It is a fair and accurate balance between builders and buyers."

C.A.: State Law Banning Forced Arbitration Preempted
The Federal Arbitration Act preempts a California law that bars enforcement of predispute arbitration agreements in construction and design defect disputes, the Third District Court of Appeal has ruled... The defendants asked Judge Suzanne Kingsbury to compel Shepard to comply with a binding arbitration clause in the real estate purchase agreement.  Shepard opposed the motion on the basis of Code of Civil Proceedure Sect. 1298.7, which permits a purchaser of real property to pursue defect litigation regardless of any arbitration clause.

Leveling the Arbitration Playing Field for Consumers
Consumers and state legislators are quite concerned about these practices, but there is an incorrect perception that states can do little about this because of the preemptive effect of the Federal Arbitration Act (FAA) and other federal law.  This model law – developed by the National Consumer Law Center – avoids such preemption and significantly limits abuses in this area.  The model demonstrates that states have broad authority to regulate such abuses, despite the preemptive effect of the FAA.

Progress on Curbing Mandatory Arbitration in Texas
As predicted this year is shaping up to be one of the best in many years, for the restoration of consumer protection rights. The filing of a bill (HB1686) by Representative Ruth Jones McClendon of Texas last week has to rank as one of the most exciting news events thus far.The McClendon bill would effectively ban the use of binding mandatory arbitration (BMA) agreements in contracts for new homes as well as home repairs.

Why? Question About Arbitration
After enduring the three day insidious arbitration process and three years of torment, my husband and I received our "Award of the Arbitrator” from the American Arbitration Association ("AAA"). (It takes thirty days for the arbitrator to make a ruling. Those days are referred to as post study. We were billed $1687.00 dollars, for her painstaking post study, for an already made-up mind.)...We are staring at this piece of paper issued because we were fraudulently induced to purchase a substandard, defective, $360,000 dollar, uninhabitable house. This award says: for our attempt to exercise our seventh amendment rights and for going before a judge for a hearing, on fraud becasue of fraud we are to pay the builders, Tremont/Stature, $14,597.50. We are to pay them because WE breached the contract.

A service to homebuyers
The lead article in the Denver & the West section of last week's Sunday Denver Post took on a very important topic: the rights of homeowners to sue homebuilders over defective construction. Unfortunately, the article was missing some important information. The article, by Karen Crummy, looked at the current debate in the state legislature about a bill to prohibit new home sales contracts in which the buyer waives some of his rights to sue the homebuilder. The article performed a very important public service by informing readers that some of these waivers may be unenforceable in court, according to a University of Denver professor. Related article: Homebuyers cede rights