Jordan Fogal was heartened to see our post on her story and read your comments. Here’s her response to some of your questions.
Thank you Ben! Now how do I respond to these comments … they are the ones I usually get.First: We did use a licensed realtor.
Two: We did not understand the true ramifications of arbitration, or it’s unfairness. No one who has not been caught in this snare does. We did not know that almost always big business wins. We thought it was like, OK kids lets sit down and not argue and fix this situation. We did not know the system was rigged. We did not understand the builders were repeat clients and the arbitrators meal tickets. No one understands arbitration companies are just the middle men. You still have to put on a trial and have all the costs associated: witnesses, subpoenas, expert testimony you even have to pay for the room to hold the arbitration in… We would not have had to pay a judge as we did an arbitrator or room rent or the astronomical fees charged by arbitration companies. Our arbitration fees alone were $9300. dollars. That does not include going to the kangaroo court where the rules of law no longer apply behind close doors. That was nearly $30,000 dollars…
3) We did have an inspector. Without invasive testing, he could not have know what was behind the freshly paint walls. Ask you builder if you can do a little destructive testing before you buy the house and see how far you get.
4) We did get legal advice. We are on our third set of lawyers. One advised us to go into foreclosure and bankruptcy and get on with our lives because in the state of Texas we would never receive any ration of fairness or justice. The builder’s lawyers know how to eat up your retainer before your check clears.
People make these comments because they still just do not understand. The public cannot accept that this can go on the this county and they have no recourse. The court house doors are blocked.
Those who run from trial prove their guilt.
If arbitration is so fair why is it mandatory?
Thank you for trying to help us all and informing the public.
Jordan Fogal
PREVIOUSLY: Tremont Homes Sells Rotten Lemon, Provokes Victimized Homebuyer Into Five-Year Consumer Crusade
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Jordan Fogal : “If arbitration is so fair why is it mandatory?”
Well said.
Any clause that, failing all other reasonable means including fair and transparent arbitration, prevents access to the courts can never be right.
so did they or did they not have a walk through and test all of the sinks, toilets and bathtubs?
I’m still confused on that point.
Please contact your Congresscritters! We need legislation to stop mandatory arbitration as a standard in contracts between individuals and big businesses. We don’t even need to prohibit it; we just need consumers to be informed of what arbitration really is. Companies that use it should be required to put, in bold letters at the beginning of their contract, “SIGNING THIS DOCUMENT INDICATES YOU ARE GIVING UP ALL RIGHT TO SUE AND THAT ANY DISAGREEMENT WILL BE SETTLED IN A COURT PAID FOR BY YOU, BUT WITH NO CIVIL OR CONSTITUTIONAL RIGHTS, AND WHERE THE JUDGE AND JURY FINDS AGAINST THE CONSUMER OVER 98% PERCENT OF THE TIME.”
Then we’ll see what happens in the free market.
Just a thought. As I understand it, an arbitration company has to base their findings within the law. Can you sue an arbitration company for improper findings? or is there another clause with the company that prevents that?
I never knew arbitration would be that bad to the consumer. I hope she is one day able to get into court and win, if she had been allowed that right from the beginning this would be over, no judge or jury would have sided with the builder.
I can see wher some people say an inspection would have found these problems but I dont agree. Yes you can run some faucets, play with lights etc. But if you run some water down the tub drain unless it is a tub full it is not enough constant volume to show up the problems.
I cant beleive the comments on blaming the Fogals. They did everything right but the builder half assed a home and did a decent job covering it up.This is in no way their fault, that builder should be in jail for fraud or else at least filing bankruptcy himself due to all these homeowners sueing the hell out of him.
Gee, when I wrote The Consumerist about doubts in seeing an arbitration clause in my newly opened IRA, I believe Ben’s response was, “Arbitration agreements are pretty standard in contracts these days. You’re probably fine.”
If they can do this with your house, what can they do with your retirement money?
Glad to see Consumerist waking up to the pure evil that are arbitration clauses.
Is there no way to get these people criminally prosecuted?
I’m a volunteer for a consumer advocacy organization and I see builder complaints every single day. In the last couple of years, in addition to shoddy construction, breach of warranty, and arbitration complaints, there have been predatory/fraudulent lending issues, particularly where the buyer used the builder’s in-house lender. There is no question in my mind that the industry professionals created these problems. Consumers didn’t cook them up, nor do consumers benefit from them.
Jordan appears to have done more than the usual consumer advice suggests, before she bought. This is also fairly common to see people get ripped off even though they were very careful. One reason this happens is that construction shortcuts can be quickly covered up, so by the time your inspector sees the house nothing serious is observable. Also, consumer complaints are assumed by the public to be readily obttainable when doing research–they’re not. Some states and many BBB’s etc only divulge some complaints, and some divulge NONE. This is something many consumers discover only because their own complaint isn’t being made public. Then they realize they were misled when doing their research before they bought. Arbitration hides many complaints because it never gets past arbitration which is a private record.
The best ‘single’ thing a home buyer can learn is to spot construction defects and shortcuts on unfinished homes. Check out the builder’s houses under construction. Do not buy from those that take shortcuts. In many areas of the country, the majority of builders take shortcuts that cost the home buyer thousands, even in violation of building codes.
There IS no real protection on a home purchase. There is no sure-fire way to research a builder’s complaint history, and for those not online it’s essentially impossible these days. (Think senior citizens who never used a computer and are thinking of buying into a new seniors only development!) If there was good consumer protection and legal recourse we would not have all these horror stories, consumer advocacy groups, etc. I assure you that trying to make changes and educate people is hard work and there is no riches or glory in it, only our own expenditure of time and money. Take complaints seriously and consider yourself lucky to have found complaints before you buy. Many do not.
It’s pretty ridiculous that arbitration could ever be allowed. It’s a circumvention of law!
Dodging real courts so you can go into one bought by one party? How the hell did this crap become legalized?
I live in the same complex in the Fogals, trust me these houses really are as messed up as they say they were. Luckily our town home has not had any major problems but others have had equally horrible problems including rotting of the walls, backwards installation, etc. However most of the other residents of the community are probably a lot better off financialy then them and have had more luck getting their way. I wouldn’t say arbitration is stacked against you, but if you dump all your money into one house and you’ve got little left, you definitely are screwed
@shfd739:
the builders are the scum of the earth…do doubt. they should more than pay for the cost of the house and arbitration this case.
i think my take on it is that, ok, this situation is what it is. How can I and others not fall into this same whole again?
that’s why there is a certain level of scrutiny into the actions of the Fogal’s. Did they do (or not do) something that I can learn from?
In every situation there are(at least) 3 sides…
– Side A
– Side B
– The Complete Truth
Concerning the testing the tubs thing. By test i don’t mean trickle a little water down the drain. I’m talking fill it up and drain it at least twice per tub. There are other test such as bringing a couple hair dryers and testing every plug in the house.
More sophisticated home testers can used specialized equipment to do density test in walls for example.
Maybe the Fogal’s should implicate their home inspector for not doing a thorough enough job?!
How did the home inspector not catch that the windows were installed upside down?!?!?!?!
We are not getting the full story here.
Dodging real courts so you can go into one bought by one party? How the hell did this crap become legalized?
Well, I agree arbitration is evil, but this practice perpetuates partly because consumers continue doing business with companies that uses arbitration, rather than seek out or demand alternatives. The only thing that can save this situation (besides making arbitration illegal) is widespread, widespread consumer education, and this is one reason I support Consumerist.
Sure, arbitration isn’t cheap – but neither is court. You think that just because you don’t have to pay for the judge (well, outside of taxes, anyway), that it would be a walk in the park?
Litigation is expensive. I dare say that litigating this case would cost a good deal more than arbitrating it. Depositions, motions, court appearances, discovery, will all rack up those hourly fees faster than you can say “I should have had a lawyer read the contract before I signed.”
Also, to pile on the victim: the Fogals keep whining about this, but the fact is that they WON the arbitration – an arbitration, if the Mother Jones article is to be believed, which the builder started. The Fogals refused to join in the neighborhood suits against the builder, instead choosing to complain to whatever agency would listen.
I get the feeling that there is MUCH more to the story than “Oh, woe is me! Arbitration is beholden to teh ev1l corporations!”
In every situation there are(at least) 3 sides…
- Side A
- Side B
- The Complete Truth
@gibsonic: Stick close to the Vorlon and look out for Shadows.
I would check out the inspector too. It seems like some of these things should have been found even if the plumbing problems were missed.
@swordfish2eva1: It’s amazing they keep getting away with it.
@E-Bell: But they haven’t gotten compensated for what they’ve been through and haven’t been provided with a properly-built home or a mortgage buyout either.
@Rectilinear Propagation: Who are you?
What do you want?
@Rectilinear Propagation:
you lost me with the scifi reference…had to look it up.
So, now that we have established that arbitration is abhorrent, how do we get away from it? Do you just cross it out on the contract? Do you have to hire a lawyer to write you up a new one and then negotiate with the business?
With everything from a cellphone contract to a home purchase agreement requiring it, how do we get away from them? Waiting for congress to do something is not really in anyone’s best interests, especially since their big money is coming from companies who are supporting binding arbitration.
@timmus: I believe part of the problem is that in many cases there aren’t alternatives. Sure, you can always buy from individuals or builders that don’t have arbitration clauses, but they’re showing up in more and more places.
I think my IRA example was important because there’s really no way you can do any banking these days without signing a contract roping you into an arbitration clause. And I suspect that someday we’ll see a bunch of consumers losing a bunch of money to a large bank. Imagine an Enron situation with a large brokerage or savings bank. I shudder at the thought.
@Buran:
True enough; it sounds like they got screwed, but I’m not quick to jump on the “arbitration is evil” bandwagon. They had lawyers. The folks in their neighborhood who are actually suing the builders are doing so, I presume, in court. Even in states where arbitration is “favored” by the courts, there is sometimes at least some kind of opportunity for judicial review.
All I’m saying is that there’s a LOT more to this story than we’re being told. The builder is (wisely) staying silent, so we’ll never hear its side of the story.
If you have an arbitration cause in a contract which you want to
challenge, the best thing to do is to file a suit in regular court
anyway. it should be argued that the contract that you read was a
contract of adhesion and you as a consumer would have been in no
position to argue its terms, therefore a problem having arisen, it
should be thrown out. Argue you were unsophisticated, argue they were a
big business, argue that as an american citzen you have a right to your
day in open court. Sue in court and then fight to keep it in the Court.
They will have to prove to get it thrown out once you sue, so that will
be their burden.
Where is the A-Team when you need them?
I’m curious -
I remember someone once told me that no arbitration is truly mandatory because, in essence, it violates your rights as an american (jury trials, legal remedy, etc.).
So how can this be constitutionally valid?
Especially since it appears that the arbiters are bought and paid for by the company requiring arbitration….
I’ll pose this question to my attorney (my dad) and see what he has to say.
Keep on fighting Fogals! Don’t get discouraged.
I cross out any arbitration clauses I find in contracts, initial and date it, and get whoever is signing the acceptance to do the same. This removes the clause from the contract. The most I’ve gotten is some lip; no one wants to lose a sale enough to insist on it staying in there or no deal.
I considered buying new when I bought my house six years ago, but frankly new construction was scary bad, so I quickly retreated to the resale market. I’m now happily entrenched in a 30 year old home that is literally made of solid concrete and steel, with a foundation that is dug into bedrock…not a single crack to be found. They literally don’t make them this way any more!
I found as much wrong as my inspector did — I walked around with him and asked probably a thousand questions. Consequently, I have had no surprises except for the hash pipe that fell on my head when I was removing some bookcases that were hung from the ceiling — which also explains the many small weirdnesses with the place. Yes, this was the house that mary jane built! ;o)
@gibsonic: Babylon 5.
@E-Bell:
Yes, they “won” the arbitration, but the amount they were awarded didn’t even cover the money they spent to get through arbitration, much less the damage to the house.
Also, maybe someone can clarify for me. Since this the decision from arbitration is binding, does that mean once it’s done, they can’t sue at all? There have to be exceptions, so what are they?
@E-Bell: Actually, failing to step forward to fight claims like this makes you look like you aren’t arguing because it’s true.
@gibsonic: Oh sorry. It’s the first place I’d ever heard it and the only place I’ve heard it since other than on the Internet.
Consequently, I have had no surprises except for the hash pipe that fell on my head when I was removing some bookcases that were hung from the ceiling…
@Keter: Too funny.
@ KETER: your house came with a hash pipe? Wow. They indeed do not build houses like they used to.
Folks, jury trials are not free, either. A litigant demanding jury needs to not only pay for the jury but the court reporter, too. That can run close to $1000 a day.
@Rectilinear Propagation:
i learned that all on my own after watch enough of my family’s internal drama. This is played out in nearly every single divorce that has ever existed. His, Her’s, The Truth. Life lessons 101.
@Keter: And they never did build them that way. Are you sure your house is ‘concrete & steel’? Are you in an International Style house? If it’s not mostly glass, it must be very claustrophobic. Bedrock? Surely you’re not serious.
There were a number of questions asked in the comments about how arbitration works. I can answer some with this general info:
Usually private arbitration such as in a contract is not overseen by the courts, and the arbitrator does not have to follow the law or allow for discovery, etc.
There is usually no appeal as it’s “binding,” but there have been instances where a BUILDER who lost appealed anyway.
Usually the homeowenr fares poorly, because they can’t get quality legal help for such unprofitable endeavors, AND the arbitrators do repeat business with the industry.
IF a homeowner gets an award of money damages in arbitration, they still have to collect, which may require going through the courts.
The courts increasinly rule in favor of arbitration, even in cases where the arbitration clause or procedure is clearly unfair to the consumer and clearly advantageous to the business.
If one wants to get out of arbitration they will have a separate court case, usually, just to get out of it…on top of their construction defect case.
Assuming they do get out of an especially unconscionable arbitration clause, the court may still order them to arbitrate but with a supposedly more neutral arbitrator. Then the court steps out of it again.
Yes, trials are expensive and there are many costs consumers pay even if their lawyer takes their case on contingency. At least a jury can be chosen though, and there are rules of court procedures that at least HELP ensure both sides play by the same rules. Expense of court is and has always been a deterrant to justice…however, taking that system and removing what has worked well, and replacing it with what favors one side, is not an improvement. PLUS, a court record is public so other consumers doing research can be forewarned. Arbitration is hardly ever public record.
@chinadoll724: No guarantee they would have done better in court.
There are limited reasons to challenge an arb. decision. They include fraud, bias, and that the arbitrator exceeded her authority.
@chinadoll724: Well, yeah. Sometimes you don’t get what you hope for. Perhaps the award they did get was what it would truly cost to repair the home. There’s no evidence that they would have gotten a different result in court.
Yes, binding arbitration is just that. Some jurisdictions will allow for some kind of judicial review, but usually when you agree to binding arbitration, you’re stuck with the decision.
@Buran: Well, yeah. That’s kind of my point. Ya gotta assert your rights.
@lalawgirl: What? Since when?
that’s it. i’m marking out any arbitration clause in any future contract i sign. they accept or i walk.
Just a quick reminder:
You can’t spell arbitratior without traitor.
“Without invasive testing, he could not have know what was behind the freshly paint walls.”
No, but you could have opened all windows (I figured this is quite typical), checked all the door hinges and turned on all the faucets, including the hot tub. Even as a renter, I’ve always done all these things before I accepted a place.
@kelbear: “How the hell did this crap become legalized?”
In theory, when it’s done right and done well, it’s far less expensive than court and allows for more creative and flexible solutions … particularly in situations where you may have ongoing contacts with the person on the other side and the adversarial process of court may sour the relationship (business or otherwise) forever.
Unfortunately, mandatory binding arbitration between an individual and a corporation is rarely fair, rarely done well, and rarely done right.
@E-Bell: The account sure makes it sound like they weren’t even given a fair hearing given how someone with evidence, witnesses, prepared materials got beaten by an unprepared smug asshole with a binder.
“so did they or did they not have a walk through and test all of the sinks, toilets and bathtubs?
I’m still confused on that point.”
Are you or are you not trying to blame the victim?
I’ve read the Mother Jones article. The best advice I can lend to Mrs Fogal is to bury this unfortunate experience before it burys you.
(Glad at age 60 you discovered that some blacks and gays are nice.)
Eek! I think I’d consider spreading the litigation joy to that inspector. Surely SOME of this stuff was possible for a trained inspector to notice. We hired a home inspector for our recent home purchase. The man was very complete, testing plug-ins and wiring, plumbing, opened every single window, tested all appliances, roof, chimney, attic, etc… He made us aware of a lot of annoying little problems we were not aware of. We also had a mold and pest inspection done at the same time, the house was build in 1952 best to be safe. After watching these professionals work it is hard to believe that a COMPETENT inspector would find nothing. Unless…he got a kick back from the builder to dim his powers of observation?
@Buran: Except that they weren’t beaten by an unprepared smug asshole with a binder. They won.
Don’t hate arbitration too much. It can very very bad, as shown above, but it can be good too. Arbitration can be ALOT cheaper than going to court, especially when you, the little guy, are the one suing the big company. It also speeds up the process significantly.
Obviously, in this case it’s not working out, but I have seen many where both sides appreciate the system…
Home inspection is a great scam. They aren’t liable if they miss things. Doesn’t matter how big a thing they miss, they aren’t liable. Don’t use the home inspector recommended by the realtor. The realtor is concerend with one thing….6%. If a home inspector finds issues with the house the price could go down. A realtor doesn’t like 6% of a lower price. A home inspector that cuts into the 6% too many times doesn’t get called by the realtor anymore.
Get the list of recommended home inspectors from your realtor, then get a yellow pages and find the home inspector who isn’t on the prefered list. Call them, show up for the home inspection and remind them they are working for you not the realtor.
The more people have the “dream” of living in a “new home,” the less open space we all have — as the great majority of these new homes are built on former farmland or other former open space. I’m not too surprised to learn that businesses that push to build new homes are consistent in their evil.
Yeah… some inspector. I’m sure it takes a genius to discover rotten rusty bulbs and improperly installed windows, right? And by the time the FLOOR is about to CAVE IN there’s going to be something for an inspector to see.
Binding arbitration sucks. What also sucks is the blind faith that people put in other people to tell them the truth about something they want to sell.
I’m sorry, but if she did have an inspection, the inspector was piss-poor. He didn’t detect a bad bathtub drain. You can do that without an invasive inspection.
The inspector we hired did just that – plugged the bath tub drain, filled it to the top, and released the stopper. This process was repeated for all sinks and the shower. By plugging the shower drain, he actually found a that the shower pan had a leak in it. We were able to get the seller to pay for the repairs. If the inspector had spent 10 minutes filling the bathtub and draining it, the 100 gallons of water would have come crashing through the ceiling before the contract was finalized.
@EDINBORON
I don’t know about other states, but in CA, anything negotiated during the inspection process usually doesn’t affect the home’s sale price or the agent’s commission. It’s usually returned to the buyer in the form of a repair or a credit at closing.
Having just purchased a home and going through the home inspection process, I learned a few valuable tips:
1) Only use a certified ASHI inspector. ASHI is the most respected organization for certifying home inspectors. The inspectors must adhere to their standards and practices. Go to http://www.ashi.org to find some near you.
2) Home inspectors look for mostly VISUAL defects. Anything behind walls or behind finished areas is not inspected. A good home inspector will explain this to you.
3) Ours did run the all the faucets in the house and commented that they drained slowly but could only surmise the reason — he recommended getting a plumber out to do a more in-depth inspection if it concerned us. In the Fogal’s case, it could be a reality that he did the same but nothing happened.
Like any other profession, it also depends on each inspector and how thorough he/she is. Our guy was meticulous — others are not — they do the basics. If your home inspection takes less than 1 hour for a small to medium sized house — then he’s not that thorough. All of this is regardless of whether it is new construction or an existing dwelling.