Professional Documents
Culture Documents
latent building defects, if they exist, have escaped the building inspector's notice.
What cannot be disputed is that a construction defect represents either a
detection failure during the inspection process and/or a misrepresentation to the
inspector by the builder. In either case, the homeowner can be left to bear the
ultimate burden. Should a defect emerge outside the warranty coverage
(something we'll explore later in this article), the homeowner must typically
submit to binding arbitration with the homebuilder as stipulated by many current
new home purchase contracts. Many homebuilders will walk away from a sale
before allowing a buyer to strike the arbitration clause in his sales contract (the
legal equivalent of suspending your Seventh Amendment right to trial by a jury
of your peers). The arbitration industry enjoys a thriving business with the
homebuilders. After all, a shoddy homebuilder can be an arbitration cash cow.
As Nancy Seats, President of the industry watchdog group Homeowners Against
Deficient Dwellings (HADD; www.hadd.com) notes, "The American Arbitration
Association has a 'construction defect' arm...that wouldn't even exist if builders
didn't build bad houses." Perhaps it's no accident then that an estimated 70% of
all arbitration decisions favor the industry client over the consumer, according to
a recent Business Week article. Arbitration is, after all, a service, and not, as the
profession would have you believe, a second priesthood. This is not an
indictment of the arbitration industry's integrity necessarily. But arbitration is a
profit-motivated service industry, nothing more, nothing less. Many consumers
have no choice but to walk away from arbitration because the costs can be
prohibitive. Arbitrator's fees can mount rapidly, often exceeding comparable
costs for a court proceeding. There can be one final indignity awaiting
homeowners who opt to air their grievances publicly. The builder can file a
Strategic Litigation Against Public Participation or "SLAPP" suit against the
homeowner. These suits are nothing more than corporate-led retaliatory actions
against individuals with the audacity (and civic-minded astuteness) to exercise
their First Amendment provision which prohibits Congress from "abridging the
right of people to petition the Government for a redress of grievances."
Yes, that's right. In America today, corporations (and not just homebuilders)
routinely threaten citizens with legal action as a means of muzzling civic
discourse. Though the burden of proof for a SLAPP suit is generally very high, as
attorney Lori Potter states, a SLAPP suit plaintiff can prevail if it can be shown "a
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for reputability. Yes, you too can be an Association member with a credit card
and a mailing address.
As for accessing the NVBIA website for the purpose of locating reputable
businesses, the message here is don't bet the house on the referrals licensure. A
home built using improperly or unlicensed contractors (no matter the quality of
the underlying work) is in violation of building codes, plain and simple. This is
because licensure represents the legal imprimatur of trade competency by the
controlling legal entity, in Virginia's case, the Department of Professional and
Occupational Regulation. Whatever his state of residency, a prospective
homeowner should investigate sub-contractor licensure status as part of his presale due diligence. Needless to say, even if there is a licensure regime within your
state, not all licensed contractors deliver highly competent work product. Nor are
improperly or unlicensed contractors universally inept or incompetent. However
from a legal standpoint, any work rendered by an unlicensed subcontractor, no
matter how exceptional the work product, is prima facie a code violation. Does
the foundation show evidence of poor workmanship? No. Was it poured by an
unlicensed sub-contractor? Yes. Well then, because the sub did not pass the
state test that --as a pre-requisite to receiving state licensure, legally establishes
his trade competency-- the foundation is improper. End of story.
trouble those builders who strive for excellence, and who attempt to earn their
reputation the old-fashioned way. Indeed how many good builders are forced to
relax their own standards in order to compete effectively with the industry's
laggards? But think twice before bad-mouthing a builder to your acquaintances.
He has a public reputation to uphold and besides, you signed a confidentiality
agreement (theres a good chance it's there in your sales contract.) So when the
next unwitting consumer seeks advice, he too will be urged to choose a
"reputable" builder, perhaps the one you and hundreds of others arbitrated
against unsuccessfully. Recently in Texas, KB Homes agreed to remove a
restriction in one of their Houston sub-division's Declaration of Covenants
preventing homeowners from airing their grievances in public and on the
Internet (a so-called "shut up" clause). Sometimes the Constitution, in this case
the First Amendment, can still carry the day.
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As HADD's John Cobarruvias bluntly states, "it is difficult to understand how any
damage could be considered for MSD coverage." And even the warranty
companies are on the binding arbitration bandwagon. So your Seventh
Amendment right to a civil trial has been suspended here as well as it often is
with the homebuilders. Despite the "10" in its name, the 1-2-10 is nothing more
than a very limited one-year warranty. Maybe those homeless folk sleeping in
their cars are onto something. State and County Consumer Protections
Hoping to better understand the consumer protections in my own jurisdiction
(Fairfax County, Virginia), I exchanged a few e-mails with Mr. Eric Olson,
Executive Director for Virginia's Board for Contractors who kindly answered all of
my emails promptly and comprehensively. Virginias Board for Contractors is a
governor-appointed board of tradesmen, contractors and others under the
auspices of DPOR tasked with regulating "businesses that construct or improve
facilities on property owned by others." As Mr. Olson explained, yes, I could
certainly ask a builder to provide me with a list of his subs. But no, they weren't
required to furnish me with such a list. No, there is no active audit function in
place whereby the state routinely inspects the vendor files of homebuilders to
ensure that sub-contractor licensure compliance is being monitored by the GC.
But yes, if improperly or unlicensed subs were being used, it would constitute a
building code violation. No, the building inspector does not monitor
subcontractor licensure status as a function of inspecting new buildings nor is it
a prerequisite for obtaining a Certificate of Occupancy. But yes, a Certificate
would not be awarded if the inspector became aware of a licensure issue.
Mr. Olson was extremely forthcoming and friendly in his explanations. However
I came away thinking how difficult it would be to nab industry wrongdoers within
such a toothless regulatory regime.
Do It Yourself
In the end, a consumer is well-advised to assume very little has been done to
safeguard his interests. To this end, there are a few things he can ascertain on his
own :
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