AUSTIN Homeowners distraught about their safety and property values after a retaining wall collapsed in their San Antonio neighborhood told state lawmakers Wednesday they feel hit again by a binding-arbitration clause in their purchase contracts.
The clause, common in home contracts, requires purchasers to go through an arbitration process with the developer and builder to settle complaints.
A homeowner has practically no rights (from) what Ive heard here today, Terry Lisherness, 62, a resident of the Hills of Rivermist, told the state House Judiciary and Civil Jurisprudence Committee. Im very upset and Im very scared.
The subdivision is home to the members of 91 families who were at least temporarily displaced. Certificates of occupancy were suspended for 25 homes.
Consumer advocates said arbitration has its place, but forced arbitration arranged before a dispute ever arises can put consumers at a disadvantage.
They said its more expensive than a court hearing and that arbitration service providers can favor the businesses that repeatedly hire them over consumers who usually are one-time users of the service.
Janet Ahmad of Homeowners for Better Building, who accompanied the homeowners to the hearing, said their contracts had such clauses for all disputes.
Valerie Dolenga, spokeswoman for builder-developer Centex Homes, confirmed the binding-arbitration clauses are included in the contracts, noting its pretty much standard operating procedure and the clauses facilitate a faster resolution of construction issues.
Disputes taken through a court system can sometimes take years to resolve during which time repairs cannot be made, so a homeowner must live with a potentially major construction defect, Centex said in a prepared statement.
Experts said the right to appeal a binding-arbitration ruling to court is quite limited, almost impossible, said Pamela Bolton, policy director for the consumer group Texas Watch.
Whats more, although the state lawmakers listened to consumers complaints, their ability to make changes is limited because binding arbitration is allowed under federal law, Bolton said.
Although some testified they believe the state could carve out exceptions that would protect homesteads from binding arbitration, Bolton said she doesnt think federal law would allow that.
She urged the lawmakers to make what changes they can, such as prohibiting clauses that prevent consumers from being paid attorney fees or from joining class-action lawsuits. Arbitration orders should be made public, she added.
The situation left several Rivermist homeowners thinking they were stuck. They said arbitration proceedings should be public, and that they shouldnt be required. They are concerned about the cost.
My home is worthless. Im 61 years old, too doggone old to start over again, Charles Cervantes said. Its too late for me, but Id like to help my kids and my grandkids.
Angelia Ward said, Im a disappointed homeowner. A deflated homeowner. ... Im not against arbitration, but at this point, I dont feel it will be something that will be beneficial to me. We need someone to speak up for us. Its a horrible situation.
Brian Ramirez, 35, said property values have decreased by $100,000 per home, and possibly more, since the incident.
Im here to fight for people in the future, he said. Its probably too late to help me.