KB Home agrees to drop arbitration from warranties
KB Home agreed Wednesday to drop binding arbitration from its customer warranties as part of a class-action lawsuit settlement.

KB Home agreed Wednesday to drop binding arbitration from its customer warranties as part of a class-action lawsuit settlement.

Plaintiffs in the lawsuit filed in Laredo in 2003 claimed that the Los Angeles-based homebuilder violated federal orders by selling home warranties that required binding arbitration as an alternative to litigation in warranty disputes.

In the settlement filed in state district court, KB Home denied the plaintiffs' claims and said it is not in violation of federal orders, the Laredo Morning Times reported for its Thursday edition.

The settlement was given tentative approval Wednesday. It restricts both sides from discussing the terms publicly.

Opponents of binding arbitration say it puts an unfair burden on buyers because the arbitration process can be expensive and the proceedings do not afford the same rights to parties as a court would.

KB Home agreed to modify the existing warranties of tens of thousands of homeowners, who will be notified by mail, the newspaper reported. The option of arbitration will remain available to owners.

The settlement makes KB Home the only builder in the nation barred from requiring binding arbitration, said Janet Ahmad, president of HomeOwners for Better Building, based in San Antonio.

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