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HomeOwners for Better Building - Homebuilder's Right-to-Repair Illusion
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Homebuilder's Right-to-Repair Illusion
Sunday, 09 July 2006

Homebuilder’s Right-to-Repair Illusion Exposed in Nevada
A builders new home warranty is a marketing tool that lures families into a false since of security
By Janet Ahmad

It’s a clever scheme that works well for the industry but is devastating to families and the American Dream.

It appears lawmakers were fooled by the building industry.  A publication called Business Las Vegas recently published an article about Del Webb/Pulte Homes lawsuits.  The author, Jennifer Shubinski, also examined Nevada’s 3-year-old builder’s Right-to-Repair law and confirmed that the law fails to stop lawsuits.  As reported: “In 2000 — three years before the law was passed — 52 residential and commercial construction-defect cases were filed. In 2001 the number of new cases surged to 69, and by 2003 the number hit 70, according to District Court records. After receding slightly in 2004 to 64 defect cases filed, the number again jumped in 2005, with 79 cases filed.”

It was reported that the builder’s "Right to Repair" law when passed in 2003 was “hailed as the key to stopping the tide of construction-defect lawsuits that many said was slowly killing the industry.”

For the past 4 years the nationwide promotion by the National Association of Builders (NAHB) has successfully painted a deceptive picture of runaway lawsuit abuse, and convinced 29 states lawmakers to pass laws that in theory would give builders more time and opportunity to repair homes and that the number of lawsuits would decline.

This theory has been invalidated in
where the bill was touted as the first Tort Reform law in the country.  The problem is the law doesn’t give an incentive for builders to construct a house right from the beginning but encourages the industry to build them as fast as possible and worry about defects later. 

The Great Illusion
When passed, most
builders saw it as an opportunity for extra time to avoid responsibility.  The results were predictable --- major or even simple warranty issues became costly legal disputes for homebuyers who were forced into Mandatory Binding Arbitration.  As a bonus, the building industry negotiated repeat business deals with arbitration companies that resulted in favorable decisions for the industry, and most importantly, there was no public record of the existence of a dispute.
Unfortunately, homeowners are learning the hard way that the NAHB’s promotion was an illusion.  Time has proven that the law actually gives a disincentive for builders to make repairs by successfully limiting builder’s liability for their mistakes. The law gave builders greater confidence that they could avoid most responsibility by ignoring repairs, which created lengthy legal disputes that homeowners could not afford.  The associated legal expenses drained homebuyers financially, causing most families to give up.

Pennsylvania Governor Edward Rendell recently vetoed the Builder’s Right-to-Repair bill, contending that the law would create expensive legal disputes. Clearly, Nevada’s 3-year history validates his concerns.

The Builder’s Right-to-Repair is an illusion and a win-win for the construction industry.  

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