New home buyers say arbitration agreements have made it difficult for them to get issues resolved

Consumers say they don't have even playing field
Posted at 8:51 PM, Sep 15, 2016
and last updated 2016-09-15 20:51:31-04

It you buy a new home, chances are you will sign a document called an arbitration agreement, allowing a third party to settle disputes between buyers and builders.

These agreements are supposed to create a level playing field, unclog the court system and save time and money.

But as the I-Team uncovered, some consumers say they give builders a big advantage.

“They took away our dream home. They took away our peace of mind, our security. It's gone,” said Traci Feist.

Every time it rains, Jamie and Traci Feist worry about the new house they bought in Palm Harbor in 2013.

“We just got 15 minutes of rain. There's water in my house, which causes mold, which is unsafe for my family,” said Traci Feist.

The home is made out of structural insulated panel systems, a new eco-friendly, energy-efficient technology.

But the Feists say those panels are soaking up water, and the roof, which has no trusses, is sagging. 

“At night you hear the cracks and pops in this house and you wonder is the wind going to blow and the house going to collapse on my family?” said Traci Feist.

In Riverview, U.S. Air Force veteran Marcus Wright says the foundation of the new house he bought from Standard Pacific Homes in 2011 is defective. 

"It's like walking on a mine field, with all different holes and all the different cracks in the floor,” said Wright.

Wright and the Feists signed arbitration agreements, which were supposed to help builders and buyers settle issues quickly, without having to go to court.

In Wright’s case, his agreement allowed also allowed him to seek a remedies to defects through the court system.

But he says he initially tried to resolve the dispute through informal mediation.

The Feists believe multiple parties are responsible for their home’s problems, and they say it’s been difficult to get everyone to respond in a timely manner.

“These arbitration agreements just protect them,” said Jamie Feist.  “And families like mine are suffering and losing everything.”

Tampa attorney Jesse Hoyer, who does not represent either party, says many new home buyers don’t understand the agreements they are signing.

She said arbitration has become commonplace in the building industry and can sometimes create an uneven playing field for consumers.

“Corporations can wait them out, they can bleed them financially. They can draw everything out over time,” said Hoyer.

“I'm 40-thousand dollars into engineers and lawyers right now,” said Jamie Feist.

In the Feists' case, the home's surveyor made a mistake, indicating the home site was not in a floodplain, when it was. 

We reached out to him for comment, but he didn’t respond.

Feists say his insurance company offered a settlement, but the Feists say the offer was not enough money to raise the home.  

The Feists hired an engineering firm, which they say identified with the panels’ manufacturer Gramatica SIPS International and local homebuilder Eco Design and Construction, LLC.

Gramatica SIPS International’s owner Martine Gramatica initially told us his attorney would contact us, but we didn’t hear from him.

We contacted the company twice again by phone and once by email, but did not get a response.

Eco Design has been dissolved since the home was finished.

Pinellas County realtor David DuBow, whose wife was one of the owners of the company and who helped oversee the project, said the house was built by a licensed contractor and passed all inspections.

He says the Feists never told him there were problems or asked for repairs during the original warranty period, but the Feists dispute that.

They say they provided DuBow with multiple punch lists related to home issues, which DuBow refused to sign. 

“They have lawyers. They can just sit there and send letters to you saying "no, no, no, no" and it doesn't cost them a thing,” said Feist.

Wright says the builder blamed subcontractors for issues in his home.

“Everybody at one point said it was their fault, yet when it came down to getting it fixed, no one did,” Wright said.

Wright says the company made multiple attempts to resolve his issues, but the repair attempts ultimately failed.

Four years after moving into his house and fearful that the state’s statute of limitations allowing him to sue would run out, he filed a lawsuit.

“Everybody that had a part of this house, we have sued them in order to bring them to the table,” Wright said.

Standard Pacific says Wright never engaged in formal arbitration, and since he is now suing the company, they can’t discuss the case.

The Feists cashed out their life savings and retirement accounts and eventually stopped paying their mortgage.

“They think that they can draw this out until we have no more funds. And then we just go away,” Traci Feist said. “We’re almost there.”

Attorney Hoyer says it’s usually a good idea for new home buyers to hire legal counsel before signing any agreements, so they will be familiar with all of their options if something goes wrong.

“Don't be afraid to ask what you're reading, what you're signing, know your rights,” she said. “Know what you're getting into.”

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