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EACH HOME WARRANTY COMPANY HAS A DIFFERENT PROCESS TO FOLLOW TO UTILIZE THEIR ARBITRATION SERVICES THAT MAY DIFFER SLIGHTLY FROM THE PROCEDURES SPECIFIED IN THIS DOCUMENT. IF THE HOME WARRANTY COMPANY DOES NOT SPECIFY WHO IS TO PAY FOR THE UP-FRONT HOME WARRANTY ARBITRATION COSTS, THE CDRS ARBITRATION PROCEDURES CALL FOR THE HOMEOWNER TO PAY ALL UPFRONT ARBITRATION COSTS AND THE ARBITRATOR WILL, AS PART OF THE ARBITRATION AWARD, ALLOCATE THE PAYMENTS OR REIMBURSEMENT OF THE PAYMENTS TO THE PREVAILING (WINNING) PARTY AS HE/SHE DEEMS TO BE APPROPRIATE AS SPECIFIED BELOW.
CONTACT HOME WARRANTY COMPANY
The first step in commencing an arbitration with a Home Warranty Company is to
contact the Home Warranty Company (HWC) and submit a request for arbitration
utilizing the forms provided by the HWC. The HWC will then provide a list of
“approved” arbitration providers for you to utilize, such as Construction
Dispute Resolution Services, LLC (CDRS).
CONTACT ARBITRATION PROVIDER
Proceed to the CDRS website and utilizing the left side navigation bars, locate
the “Arbitration Forms and Documents” section. The fourth document in that
section is the “Home Warranty Request for Dispute Resolution Services”
(Request). Please Download and print that Request form and submit it to your
Home Warranty Company along with the $350.00 required filing fee, payable to
CDRS. If there is more than one Claimant or Respondent, please also locate the
“Additional Parties Addendum”, located directly after the Request form and
indicate the additional Claimants and/or Respondents. Also locate the “Home
Warranty Agreement to Arbitrate” in the Arbitration Forms and Documents section
of the CDRS website, print the Agreement, read the Agreement, sign the Agreement
and forward it along with a check payable to CDRS for $600.00 to cover the cost
of the arbitration, to the Home Warranty Company. Forward both forms to the Home
Warranty Company along with the $350 filing fee and $600 arbitration fee. (You
may forward a check for $950.00 payable to CDRS to your Warranty Company if that
is more convenient than two separate checks.)
Note: Most HWC require the Builder to be listed as the Respondent during the
first (and second year) of the warranty period and the HWC to be listed as the
Respondent during the second and/or third through the tenth year of the warranty
period. Some HWC also list the builder as a Respondent during the second and/or
third year through the tenth year. Please check with the HWC to determine who
should be listed as the Respondent.
CDRS FIRST RESPONSE
Upon receipt of the Request, the signed Home Warranty Agreement to Arbitrate,
and the filing fee and arbitration fee from the Home Warranty Company, CDRS will
send out a list of available dates to hold the arbitration hearing, as selected
and provided by the arbitrator. Each Party shall indicate all dates that will be
convenient for them and shall forward their preferred dates to CDRS. Hopefully,
all Parties will have selected at least one common date for the arbitration
hearing that is convenient for all of the Parties. Both parties will also be
reminded to send to CDRS, two copies of any additional information that they
would like the arbitrator to review prior to the arbitration. (A copy must also
be sent to the RWC and the other party if applicable.)
CDRS SECOND RESPONSE
CDRS will then send a “Notice of Arbitration” to the Parties that will specify
the date, time and location of the arbitration hearing along with other related
information. If all parties can not agree on a convenient date, CDRS Home
Warranty Rules and Procedures allow CDRS to select the date and time for the
arbitration hearing. The arbitration shall take place in the homeowner’s
residence unless all Parties and the arbitrator agree to hold the hearing at
another location.
THE ARBITRATION HEARING
There are three different types of arbitration hearings:
Covered or Not Covered – The sole responsibility of the
arbitrator is to determine if an issue in dispute is covered or not covered
by the HWC warranty/policy. The question of whether an item is covered by
the HWC rests entirely on what is specified in the HWC Warranty booklet
(booklet) that was issued for the home. The arbitrator’s scope is to
interpret if the item meets all of the requirements as specified in the
booklet. As an example, if the booklet specifies that there are three
conditions that must be met in order for an item to be called a “major
structural defect”, if only one or two of those conditions have been met,
the arbitrator must declare that item as “not covered”. If there were
several items in dispute between the homeowner and the respondent, the
entire arbitration award will consist of a list of those disputed items as
covered or not covered. The arbitrator will not give any reason for his/her
decision other than to reference to the applicable section of the coverage
booklet that he/she used in rendering his/her decision or if the arbitrator
decides that an issue needs clarification.
Method of addressing the covered items - After the
arbitration award is issued, the Respondent will contact the homeowner to
discuss and plan for the repair, replacement or applicable treatment,
including a cash settlement, that they will take to correct the problems
that were specified as “covered” in the arbitration award. If for any
reason, the homeowner does not agree with the manner selected by the
Respondent to address the covered items, it may be necessary to return to
arbitration to have the neutral arbitrator decide on the appropriate method
to remedy to dispute in question. The same arbitrator may be utilized
depending on the technical construction knowledge and availability of the
arbitrator.
Quality of corrective action – After the repairs,
replacement or applicable treatment of the covered items is complete, if the
homeowner is not satisfied with the quality of the work performed or with
the quality of the materials used, it again may be necessary to return to
the arbitration process to allow the arbitrator to decide if the repairs
were completed according to the agreement with the Respondent and the
homeowner. Please keep in mind that any procedures specified in the HWC
booklet that were in effect at the time of the purchase of the warranty will
take precedence over any current industry guidelines that may be now
specified by a manufacturer or other neutral organization.
Remember that the decision of the arbitrator is “final and binding” on all
parties and is not subject to appeal other than on certain very limited
procedural grounds. All arbitration awards shall be “unreasoned” and shall
specify the award without providing a specific reason for the decision of
the arbitrator other than referencing to the appropriate section of the HWC
booklet used in the arbitration or if the arbitrator decides that an issue
needs clarification. If the Claimant or respondent would like a
clarification or additional reasoning for the arbitration award, please
contact CDRS.
COST AND PAYMENT OF THE ARBITRATION PROCESS
Although many HWC policies specify various methods of handling the costs and
payments related to the arbitration process, the following are the standard
methods generally followed by the HWC industry.
In most instances, the homeowners (Claimant) will be
required to first pay a non-refundable “filing fee” to be submitted with a
“Request for Dispute Resolution Services”, along with a check to cover the
cost of the arbitration which may be refunded to the claimant according to
the postponement and cancellation fees procedures as specified on the CDRS
website and according to number 4 below.
In most instances, the homeowner is required to pay all
up-front costs related to the arbitration process with the understanding
that the arbitrator will re-allocate the expenses to be paid according to
whomever he/she feels is the prevailing party after the arbitration has
concluded. If the arbitrator determines that the majority of issues in
dispute were decided in favor of the homeowner, the majority of the expenses
may be paid by the Home Warranty Company (Respondent) and the homeowner may
be reimbursed for the expenses and deposits paid up-front by the homeowner.
If the arbitrator determines that the Respondent was the prevailing party
and was correct in most of the disputed items, the homeowner may not be
reimbursed for the expenses they paid up-front. The arbitrator may, as part
of the award, allocate the expenses in any percentage or in any manner that
he/she determines to be fair to the Parties.
At the conclusion of the arbitration, the arbitrator will
submit the “Arbitration Award” to CDRS along with a recap of his/her fees
and expenses. If the deposit received by CDRS that was paid by the homeowner
covers or exceeds the total costs of the arbitration process, a “certified
copy” of the arbitration award will be issued to the Parties and a refund
check will be sent to the homeowner for any amount paid that exceeds the
amount required to cover the costs of the arbitration. If the deposit was
not adequate to cover the total costs of the arbitration, CDRS will invoice
the appropriate Party(s) for the amount that is due. The arbitration award
may not be issued to the Parties by CDRS until the amount due is paid in
full. (Please check the CDRS Arbitration Rules and Procedures for additional
information on alternative payment options related to the issuance of the
arbitration award.)
If the arbitration is properly cancelled subsequent to a
deposit being paid by the Claimant but prior to the arbitration hearing, a
refund will be sent to the Claimant after all appropriate expenses have been
deducted including but not limited to the arbitrator’s preparation time and
related expenses, any administrative costs of CDRS that have been expended
or any other expenses that were incurred as a result of the arbitration
request. An arbitration that is cancelled less than 72 hours prior to the
arbitration will be subject to a cancellation fee as specified in the CDRS
Fees and Costs Schedule.
If the Claimant or Respondent requests a clarification or explanation of an unreasoned arbitration award, the additional costs related to the writing and issuance of the clarification or reasoned award shall be the responsibility of the party requesting the reasoned award.