AUSTIN â 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.
âA homeowner has practically no rights (from) what Iâve heard here today,â Terry Lisherness, 62, a resident of the Hills of Rivermist, told the state House Judiciary and Civil Jurisprudence Committee. âIâm very upset and Iâm very scared.â
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 â arranged before a dispute ever arises â can put consumers at a disadvantage.
They said itâs 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 itâs âpretty much standard operating procedureâ and the clauses âfacilitate a faster resolution of construction issues.â
âDisputes 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,â Centex said in a prepared statement.
Experts said the right to appeal a binding-arbitration ruling to court is quite limited, âalmost impossible,â said Pamela Bolton, policy director for the consumer group Texas Watch.
Whatâs more, although the state lawmakers listened to consumersâ 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 doesnât 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 shouldnât be required. They are concerned about the cost.
âMy home is worthless. Iâm 61 years old, too doggone old to start over again,â Charles Cervantes said. âItâs too late for me, but Iâd like to help my kids and my grandkids.â
Angelia Ward said, âIâm a disappointed homeowner. A deflated homeowner. ... Iâm not against arbitration, but at this point, I donât feel it will be something that will be beneficial to me. We need someone to speak up for us. Itâs a horrible situation.â
Brian Ramirez, 35, said property values have decreased by $100,000 per home, and possibly more, since the incident.
âIâm here to fight for people in the future,â he said. âItâs probably too late to help me.â
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