All of the Builder warranty programs offered by Residential Warranty Company, LLC, HOME of Texas or MHWC feature mandatory binding arbitration of Unresolved Warranty Issues.* RWC and its Builder members have been very successful at persuading courts to recognize and enforce the warranty’s mandatory binding arbitration provision. Courts across the country have removed cases from the courthouse and directed them to arbitration under our Limited Warranty Programs.
A good example can be found in this case study. Residential Warranty Company, LLC (RWC) had issued a warranty on a home, which was in Year 1 of coverage, and the homeowners filed a lawsuit against the Builder. The Builder was well equipped to defend himself with the home warranty book, the application for warranty and his own contract, which included language that made the RWC home warranty, including the warranty’s binding arbitration language, applicable to any alleged warranty defects in the home. Even though the homeowners argued that RWC’s warranty should not be enforced in that state, the court endorsed RWC’s warranty, and the motion brought by the Builder to compel arbitration and dismiss the homeowners’ lawsuit was granted in its entirety.
Consequently, the homeowners initiated a request for warranty performance with RWC. Prior to arbitration, the Builder’s home warranty provides for informal mediation. The parties agreed to use RWC’s mediation to try to settle the disputes about the alleged warranty defects. RWC became actively involved mediating between the homeowners and the Builder. Through this mediation, communication between the homeowners and the Builder improved and several items were amicably resolved. We were encouraged that most, if not all warranty items, would soon be resolved in the same way. At the conclusion of mediation, if any items remained unresolved, the homeowners and Builder would proceed to binding arbitration under the terms of the warranty.
This is a real case and a great example of how RWC’s mandatory binding arbitration provision is an effective tool in preventing litigation. It also supports the value of using RWC’s mediation process to resolve disputes about alleged warranty defects in the homes you build. To get more information on how to best utilize the mediation and arbitration provisions of your RWC, HOME or MHWC builder warranty, contact us at sales@rwcwarranty.com to schedule a Warranty Training Seminar.
*Note that the mandatory arbitration provision is removed by the HUD addendum, and thus mandatory arbitration does not apply to warranties placed on FHA/VA financed homes.
As hopefully you are aware, all of RWC’s home warranty programs include our effective home warranty resolution process which includes mediation and, if needed, formal arbitration. We are asked from time to time if the system works...or in other words, if the warranty is “worth it.” So from time to time, we like to highlight a specific case study which shows exactly how this process benefits you, our member.
In this case study, the home was in Year 1 of home warranty coverage and was financed through VA/HUD. The homeowner’s request for warranty performance stated: “The duct work is making continuous knocking/ticking noises during every heating and air conditioning cycle.”
During RWC’s mediation, the builder informed RWC that they spent more than 40 hours “without exaggerating” trying to find the ticking while opening up the ceiling, and there definitely was not oil canning. The builder concluded that he had exhausted all efforts. RWC declared the issue unresolved and referred the homeowner to the warranty’s arbitration provisions.
The homeowner completed and returned the arbitration forms and paid the arbitration fee of $950.00. The parties to the arbitration were the builder and the homeowner.
The arbitrator determined: “Residential Warranty Company standards provide that with regard to ‘excessively loud notices’ in ductwork, such ductwork will be adjusted if necessary to eliminate noises caused by oil canning. Therefore, parties during the arbitration agreed in that the reported noise problem is currently not audible. The homeowners stated that they have, in fact, not heard it for some time, and not at all during this air conditioning season. The request of the homeowner is ‘Not Covered’ according to the warranty book. No repairs or other further remedies are necessary for a problem which both parties agree does not currently exist, and one party claims to have never existed. Based upon the above findings of fact, and the award in favor of builder, all costs are to be paid by the homeowners.”
Not only did the builder have a successful award, but he did so in a very timely, economical manner. Additionally, it was not necessary for either party to be represented by counsel.
This is a real case and a perfect example of how the builder’s warranty standards prevent unmerited complaints and support the value of RWC’s resolution process.
Learn more about RWC’s home warranty plans and builder benefits!