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Dallas Morning News Editorial on Frisco
Friday, 15 April 2005

John R. Cobarruvias: Strike a blow against forced arbitration
On May 7, the citizens of Frisco have an opportunity to correct this unfair situation and demand full disclosure from the home building industry.


John R. Cobarruvias: Strike a blow against forced arbitration

In the mid 1990s the Texas home building industry began demanding the use of arbitration, requiring new home buyers to give up their constitutional right to a civil trial in the event of a construction defect. Arbitration has since been found to be grossly unfair, extremely costly and completely out of control.

On May 7, the citizens of Frisco have an opportunity to correct this unfair situation and demand full disclosure from the home building industry.

The amendment on the ballot would require full disclosure about the arbitration clause, including cost, the arbitration process and procedures, and the fact that the Seventh Amendment of the Constitution will be waived. It would also give the buyer the opportunity to decline the arbitration agreement at the time of purchase, yet preserve the use of arbitration in case a construction defect arises that could not be resolved through negotiations.

The home builders have claimed that arbitration is faster, cheaper and better than our time-honored court system, while hiding the arbitration clause in fine print. But over the last three years, four studies conducted by the Texas House, Texas Senate and the newly created Texas Residential Construction Commission have shown that arbitration is grossly unfair and extremely costly. At statewide hearings, the home builders have been hammered with horror stories about arbitration fees of $6,000 or more, the arbitrator's fees of $1,200 a day, nonpayment of arbitration awards by builders and arbitrators who ruled against the homeowner while also acting as legal counsel to the home building industry.

On the other hand, there is not one single report or study showing how arbitration can benefit a homebuyer. There is absolutely no doubt that mandatory, binding, arbitration is a complete total consumer scam, which can financially ruin a homeowner. The continued use of this practice and the advocating by the home building industry should be stopped.

During the last few years, homeowners who have been harmed by arbitration have taken their time and money to attend hearings in Austin, talk with elected officials, and protest and picket, in order to shed light on this abuse by the home building industry.

Unfortunately, the leadership in Austin has blocked all efforts to correct this unfair situation. Arbitration bills that would require full disclosure prior to purchasing a new home, limit the cost of arbitration fees to the cost of a civil trial ($125) and regulate those who perform arbitration services have been left hanging. And so have the homebuyers.

And while homeowners look for help, not one single city council or other level of government in Texas has asked for assistance or called for reforms in the arbitration process. Instead they have left it to grass-roots organizations to demand their constitutional rights to a civil trial while also preserving the use of arbitration if it is fair to both parties. This is exactly what the Becka family, who has spearheaded this amendment, has done.

Their amendment will require full disclosure in other aspects, including warranties on products used in the construction and warranties on the home.

The builders already perform much of this, and the others are very simple to perform, but the home building industry and its supporters will latch on these simplistic requirements to ward off attention to the real problem: their own abuse of arbitration.

The home building industry claims it has been advocating for the consumer for many years, saying arbitration is good for the consumer. Yet who gave them the authority to decide who has rights to the U.S. Constitution and which rights homebuyers can have?

It is a shame that the citizens of Frisco must give up their rights as Americans in order to purchase the American dream, but on May 7, they have a chance to preserve the use of arbitration, if it is fair to both parties, and to restore their access to rights once protected by the Constitution.

Who, besides the home building industry and those who benefit from the industry, could possibly be against this?

John R. Cobarruvias of Houston is the Texas president for Homeowners Against Deficient Dwellings. To contact him or for more information, visit www.hadd.com.

12:12 AM CDT on Thursday, April 14, 2005Online at: http://www.dallasnews.com/sharedcontent/dws/news/city/collin/opinion/stories/041405dnccotbyr.a83c79a
 
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