In 1999 Centex Homes began adding a five-page
addendum to its standard California home sales contracts. Throughout
California, Centex's routine sales practice has been to hide the
addendum in a large stack of miscellaneous sales documents which
are presented to the buyers for immediate signature. According
to the lengthy single-spaced wording of the hidden addendum, homeowners
having construction defect complaints against Centex are required
to submit their complaints to a mandatory mediation/referee proceeding.
According to Centex's addendum, homeowners must:
- Waive their right to trial by jury;
- Waive their right to any trial;
- Waive their right to pretrial discovery;
- Waive their right to punitive damages, even if they are entitled
to such damages under California law;
- Submit to mandatory "mediation" pursuant to which
the home buyers must pay a pro rata portion of all the mediation
expenses (which in practice typically runs into many thousands
of dollars);
- Submit to mandatory "judicial reference" pursuant
to which:
- discovery rights are eliminated;
- the proceedings are kept secret
- the home buyers must pay a pro rata portion of all the reference
proceeding expenses (which in practice typically runs into many
thousands of dollars); and
- the home buyers, if they prevail, can not recover any of their
expenses or attorneys fees even if they would otherwise be entitled
under California law to such expenses and fees.
San Diego attorney Douglas Grinnell of the law firm of Epsten Grinnell
& Howell, discovered Centex's addendum
while representing a group of Centex homeowners in Tulare, California.
Centex's attorneys demanded that Mr. Grinnell's clients submit
to the onerous provisions of the addendum. "When I first
read this document I began to get scared," said Mr. Grinnell.
"I felt like being on the football field while the other
team places fifteen huge monsters on the other side of the line
of scrimmage. And then I begin to think 'Wait a minute, they can't
do that!' And then I became furious. This addendum perfectly symbolizes
the contrast between the glowing words in Centex's sales brochures
and the arrogant, utter disdain, Centex actually has for its customers.
This is typical Centex 'customer service.”
Mr. Grinnell immediately called Homeowners Against Deficient Dwellings Inc. HADD director, Sandy Skipper-Lopez, and asked
if she would be willing to serve as a plaintiff in a state-wide
private attorney general action challenging Centex's addendum.
Under California Business & Professions Code section 17200
"any person" may sue on behalf of other persons who
have been victims of unfair or unlawful business practices. Sandy
gladly accepted.
"I was floored when I read Centex's addendum" said Lopez.
"HADD believes that home purchase contracts should be written
so that everyone will understand their rights, responsibilities,
and most importantly what rights they may be signing away. That
all parties are best served by a contract that is both comprehensive
and comprehensible---It is of my opinion that Centex's addendum
is neither. Contract additions such as this along with the recent
Aas decision that basically says builders are no longer liable
for code violations until the home or homeowners sustain injury
leave us with what? Now Centex is stipulating in contract addendums
that a negligent builder who may be responsible for injury to
one’s family should not be held accountable? Preposterous.
Punitive damages are often all the consumer has left to hold corporations
and wrong doers accountable. Too, I have never witnessed a homeowner
forced into a confidential agreement prior to any settlement."
On November 26, 2001, Sandy and Mr. Grinnell filed suit in San
Diego Superior Court seeking a statewide injunction and full restitution
for all homebuyers who have submitted to Centex's addendum. Grinnell
asserts that Centex's addendum is both unfair and unlawful in
several ways. Under California law, a developer cannot force alternative
dispute resolution (also known as "ADR") on buyers and
at the same time limit the buyers remedies, limit the buyers discovery
rights or force them to pay for the ADR. "We want the court
to issue an order directing Centex to stop using its illegal form
when selling homes to unsuspecting buyers," said Grinnell.
Both Grinnell and Lopez ( of Madera, California) are known for
their diligence in protecting the homeowner/buyer. Both are active
participants of the California HomeSafe Campaign. The HomeSafe
Campaign is a coalition of homeowners,
consumers, affordable housing advocates, workers and attorneys
who oppose the building industry's efforts to limit homeowners'
legal rights to recover losses from construction defects in their
homes. Douglas Grinnell can be reached through Doug's
Email
Greater Consumer Protection(?)
California SB 135
Governor Davis signed SB 135 into law,
legislation that will allow the Contractor's Board (along with
other boards governed by the state) to disclose pending complaints
from consumers. Under SB 135, The CSLB, Contractor's State Licensing
Board staff need not complete all the detailed work that must
go into creating formal accusations. Complaints may be disclosed
at the time the Enforcement Representative decides, in consultation
with his or her supervisor, that CSLB should seek to suspend or
revoke the contractor’s license. Translation: More expedient
posting of consumer complaints.
"It's a band-aid on a bullet wound,
but more than we had before", says Sandy Skipper-Lopez (Madera,
California), HADD Director. HADD cautions the public that this
legislation and new policies, although a small stride for homeowner/buyers
is not an absolute in homebuyer protection and reminds the public
that:
Homebuyers/owners need be made aware that a license and clean
record through this agency is no guarantee of a builder's competency,
testimony to ethical business practices and/or lack of legal "civil
and/or criminal" history.
"These are board pending complaints that the public sector
far too often confuses with civil legal actions---if one can only
imagine almost 90% of all defect suits are settled out of court.
Homeowners and homebuyers unsuspectingly buy homes or home improvements
from builders who have hidden civil histories of poor building
practices, a history that regardless of research was unobtainable
by what is perceived as conventional methods- i.e. the CSLB license
search and the Better Business Bureau." HADD Director, Sandy
Lopez brought this issue to the attention of the CSLB who agreed
and are now disclosing per telephone inquiries that license status
does not include pending civil and or criminal actions. "We
want bold disclaimers on the website homepage as well," states
Lopez, "one has to wonder also if the board's own industry
experts that handle consumer complaints may have a hidden history.
This board could be unknowingly sending in experts that have and/or
are presently litigating with homeowners. That's pretty scary."
Never ending story:
Rick and Sandy Lopez attended hearings on disclosures policies
with the Department of Consumer affairs last week in Anaheim relating
to SB 135---they returned to a complaint concerning nine homeowners
who bought from a builder known to have a construction related
civil history. The homeowners relayed to Lopez that they did indeed
research their builder through the CSLB and found his license
to be "in good standing". When Lopez asked the CSLB
to consider posting pending civil actions that are construction
related they feared this might harm builders---"Maybe it
is time the scales of justice tipped in favor of the consumer
for awhile," says Lopez. "They post their own pending
legal action. I believe the posting of pending civil action that
is construction related, along with defects and code violations
that are opined by state licensed contractors and or engineers,
architects etc....should be deemed reliable and available to the
public through this agency."
HADD now recommends that homebuyers and owners check out a builder
through their county court house---but Lopez says that is simply
not enough when bad builders have a tendency to move from city
to city leaving the remnants of a civil suit behind. "It's
public information. A builder whose civil reputation can be disclosed
through the licensing board will in my opinion, build it right
the first time and make repairs. He simply wont have his insurance
company, name changes (DBA's), moves and attorneys to hide behind."
Homeowners who desire to file a complaint with this agency are
encouraged to concurrently file in the courts to retain their
statutes, however at present, HADD does not endorse the use of
this agency. The Lopez's will continue addressing this agency
in hopes of change. The Lopez's encourage any homeowners who have
had problems with the CSLB to contact them through HADD through
Sandy Lopez.
Predatory Lending
Attention Victims of Predatory Lending
Household Finance and Beneficial (both
owned by Household International) make abusive and unfair loans.
ACORN®, the Association of Community Organizations for Reform
Now, is working to stop Household's predatory lending. If you
have received a predatory loan from Household ( OR ANY PREDATORY
LOANS), please contact ACORN® tollfree at 1-877-552-2676 or
AcornNews@Acorn.org! Please copy all correspondence to HADD President
Nancy Seats.
Homeowners in the News
Congrats to Arizona HADD president Tracy
and Mike Schofield on their recent story (and series) in the Arizona
Republic. Please visit Mike and Tracy on our website and see their
photo (cute couple) and read their new home nightmare story.
HADD in Vegas
In September, HADD Representatives, Mike
and Tracy Schofield (Arizona), Board members Nancy Seats (Missouri)
Rick and Sandy Lopez (California), Paula and Elliot Schulman(
Arizona) along with authors Jeff and Susan Treganowan (The Ultimate
New-Home Buying Guide) teamed up in Las Vegas to attend the HADD
sponsored "Stop the New Home Nightmares" seminar.
HADD members were challenged by the Schofields to donate any winnings
to HADD---The results of this challenge? We are still underfunded
and only managed to pay Nevadan's state taxes. Seats and the Lopez's
met with Nevada attorney Matt Grode to discuss the ongoing problems
facing Nevada Homeowners. HADD would like to thank Matt Grode
for all his assistance and help in educating the homeowner of
their legal rights.
