All of RWC’s warranty programs 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 courtroom and directed them to arbitration under RWC’s Limited Warranty Program.
An excellent example is discussed in this case study. During the first year of a home enrolled with RWC the homeowners filed a lawsuit against the Builder. The Builder was well equipped to defend himself with the RWC warranty book, the application for warranty and his own contract which included language that made the RWC 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.
Consequently, the homeowners submitted a request to RWC for warranty performance. Prior to arbitration, the warranty provides an informal mediation process. The builder and homeowners agreed to use RWC’s mediation to try to settle the warranty disputes. RWC actively worked to mediate between the two sides and successfully improved communication between the homeowners and the Builder. Several items were amicably resolved and all sides were hopeful that most, if not all warranty items, would soon be resolved in the same way. By the end of any mediation, if any items remain unresolved, the homeowners and builder may 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 points out the value of using RWC’s mediation process to resolve disputes about possible warranty defects in the homes you build.
*Note that per HUD regulations, mandatory arbitration does not apply to warranties placed on homes financed under FHA or VA financing.
