CDRS HOME WARRANTY ARBITRATION PROCEDURES
THIS SECTION OF THE CDRS WEBSITE APPLIES ONLY TO ARBITRATION REQUESTS FROM HOME WARRANTY COMPANIES. INDIVIDUAL HOME WARRANTIES PROVIDED BY BUILDERS MUST FOLLOW THE CDRS GENERAL ARBITRATION PROCEDURES IN REQUESTING THAT CDRS PROVIDE ARBITRATION SERVICES.
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.
NEW JERSEY ARBITRATIONS – PLEASE SEE THE NEW JERSEY HOME WARRANTY ARBITRATION INFORMATION SECTION ON THIS WEBSITE
CONTACT HOME WARRANTY COMPANY
The first step in commencing the arbitration process 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 warranty booklet may suggest the names of “approved” arbitration providers for you to utilize. If the warranty booklet does not specify available arbitration providers, the warranty company should suggest or specify an arbitration provider who will handle your claim. According to the warranty booklet, you might be required to forward a check payable to CDRS to cover your portion of the required minimum arbitration fees.
The homeowner shall be the Claimant. 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. (There is no Plaintiff or Defendant as utilized for litigation cases.)
CDRS will commence the Home Warranty arbitration process after CDRS has received the required arbitration request paperwork and required minimum deposit from the HWC unless other arrangements have been made between the HWC and CDRS. Note that the homeowner is required to provide a “CONSTRUCTION DEFECTS TO BE ARBITRATED form that provides CDRS with the applicable sections of the warranty booklet or other documents that covers the homeowner’s claims. This information might be provided by the HWC to CDRS.
CDRS ARBITRATION INITIATION
Upon receipt of the Request and the appropriate fees from the Home Warranty Company, CDRS will assign an arbitrator based on the geographic location of the homeowner’s residence, the nature of the dispute, the construction experience and qualifications of the arbitrator and the availability of the arbitrator. CDRS will then forward to the appropriate Parties, a letter that specifies and appoints the arbitrator and outlines the process to be followed in conducting the HWC arbitration process. The letter will also include the rules and procedures of the arbitration process along with other related information including suggested dates to hold the arbitration hearing at the residence of the homeowner.
Should a “documents only” arbitration be appropriate as per the CDRS Home Warranty Arbitration Rules and Procedures, CDRS will notify the Parties of the process to follow.
Note that CDRS will communicate via email with all parties or via telephone should it be appropriate. CDRS will utilize the email addresses of the homeowner and the builder that is supplied by the HWC to CDRS. Should either or both Parties be represented by counsel, the attorney’s email shall be utilized, and the emails of the attorney’s client will not be utilized unless it is requested by the attorney. As it is important for all Parties to receive all emails from CDRS, CDRS requests all Parties to acknowledge receipt of all emails from CDRS. CDRS will likewise reply to all emails from the Parties indicating that CDRS has received the email.
CDRS DATE SELECTION:
After CDRS receives the date selections of the Parties as specified in the first email/letter from CDRS to the parties, hopefully, all Parties will have selected at least one common date for the arbitration hearing that is convenient for all of the Parties. Should the Parties not agree on a date to hold the arbitration hearing, CDRS will obtain new suggested dates to hold the arbitration hearing from the arbitrator which will be forwarded to the Parties for their agreement. If both Parties cannot 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.
CDRS NOTICE OF ARBITRATION HEARING
After CDRS has obtained the agreed upon date to hold the arbitration hearing from the Parties, CDRS will then send a “Notice of Arbitration Hearing” to the Parties that will specify the date, time and location of the arbitration hearing along with other related information. CDRS will request that the Parties sign and return the Notice to CDRS.
CDRS will send out a reminder to the Parties within the week prior to the scheduled arbitration hearing. The homeowner will be reminded that it is the responsibility of the homeowner to demonstrate to the arbitrator that the claim is covered by the applicable warranty. It is not the responsibility of the arbitrator to search and find the applicable section of the warranty in the warranty booklet.
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 as specified by the Construction Guidelines in the warranty booklet or as specified in other documents referenced in the warranty booklet. 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 at the time that the warranty was purchased. The homeowner may be required to submit a CONSTRUCTION DEFECTS TO BE ARBITRATED form that specifies the applicable sections of the warranty related to the claims submitted. The arbitrator’s scope is to interpret if the claim 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 a claim 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” as all three requirements have not been met. If there were several claims in dispute between the HWC/builder and the homeowner, the arbitration award will consist of a list of those disputed claims as covered or not covered by the warranty. 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 a decision of the arbitrator needs clarification, he/she may provide additional reasoning of his/her decision. (Note that CDRS generally allows the builder approximately 60 days from the date of issuance of the arbitration award by CDRS for the builder to address the covered claims from this first arbitration hearing.)
- Method of addressing the covered items or cost settlement- After the arbitration award is issued, the HWC or the builder 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 claims that were specified as “covered” in the arbitration award. If for any reason, the homeowner does not agree with the manner selected by the HWC or builder to address the covered claims, it may be necessary to return to arbitration to have the neutral arbitrator decide on the appropriate method to remedy the claim in question including determining the correct amount of a cash settlement. The same arbitrator may be utilized depending on the technical construction knowledge and availability of the arbitrator. If applicable, the arbitration may be handled by a “documents only” arbitration which will not require the arbitration hearing to be held at the residence.
- Quality of corrective action – After the repairs, replacement or applicable treatment of the covered claims 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 HWC/Builder and the homeowner and no longer would be considered as a covered claim according to the warranty booklet. 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 an explanation or a clarification.
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 homeowner or person filing the request for arbitration is required to pay all up-front costs related to the arbitration process with the understanding that the arbitrator may re-allocate the CDRS arbitration fees as part of the arbitration award. If the arbitrator determines that the majority of claims in dispute or the major claims in dispute were decided in favor of the homeowner, the homeowner may be reimbursed for the CDRS expenses and deposits paid up-front by the homeowner. If the arbitrator determines that the builder or HWC was the prevailing party and was correct in most of the disputed claims, the homeowner will 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.
- In most instances, the homeowners will be required to first pay a non-refundable filing fee and a non-refundable arbitrator fee to cover the cost of the arbitration process to be submitted with the “Request for Dispute Resolution Services”. Although it rarely occurs, after a review of that request by CDRS, the homeowner may be required to submit an additional deposit covering the estimated cost of the arbitration that will be determined by the number of items in dispute, the complexity of those items, the distance that the arbitrator may have to travel to the residence and other expenses related to the arbitration.
- 3. Within 30 days of the conclusion of the arbitration hearing, 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 (and or builder or HWC) covers or exceeds the total costs of the arbitration process, the arbitration award will be issued to the Parties. 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.)
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 YOU HAVE ANY QUESTIONS AS TO THE PROCEDURES TO BE FOLLOWED WITH YOUR ARBITRATION, PLEASE CALL YOUR HWC TO DISCUSS YOUR INDIVIDUAL ARBITRATION AND ITS SPECIFIC PROCEDURES THAT WILL BE FOLLOWED.