By OLGA CAMPOS / KVUE News
KVUE Story & Replay: http://www.kvue.com/news/top/stories/052306kvuekbhome-cb.161c95ac.html

KVUE Video: Judge: Homeowners can sue KB Home

KB Home, the fifth largest home builder in the nation, has suffered a legal blow. A ruling by a Texas district judge now gives homebuyers the option of suing KB Home, rather than being forced into binding arbitration.

Yet some consumer groups doubt the judge's ruling will change the way KB Home does business.

Ever since she moved into her new KB Home, Natalie Shanks says there have been structural problems. Other homeowners have experienced similar complaints, even posting photos on a Web site.

At issue are contracts and warranty agreements which force homeowners to agree to binding arbitration. That means you can't sue and decisions to resolve disputes are final.

Twenty-seven years ago, a court order prohibited KB from including binding arbitration clauses in its contracts and warranties.

Just last year the Federal Trade Commission fined KB Home $2 million for ignoring that 1979 court order.

Again, just last week, a Texas judge ordered KB Home to stop forcing homeowners to agree to binding arbitration. But the right to sue has its drawbacks.

"I can't afford to sue KB, and they know it. They've ignored me and my issues... issues in our neighborhood," said one homebuyer.

Since, KB has been warned by the federal government before, Mike Zawhaideh expects it to be business as usual for KB Home.

"It seems like they expect those type of fines and they can live with the fines," he said.

Yet many residents are just about ready to give up their fight against the nation's fifth largest homebuilder.

"I'm tired of the run around that I've gotten from this particular homebuilder. I want them to buy my house back," said one homeowner.

In response, KB Home says it's informing Texas homeowners that binding arbitration is no longer required.

05:58 PM CDT on Tuesday, May 23, 2006