"Express warranties" required under House Bill 1393 wouldn't protect homeowners
Editor's Note: Earlier today the Senate Labor, Commerce & Consumer Protection held a public hearing on HB 1393, a bill passed by the House which is intended to help prevent builder negligence and provide homeowners with a recourse when a builder is at fault. As currently written, HB 1393 sadly does more harm than good. Although we're hoping the bill can be improved, we oppose it in its present form.
The following is a polished version of my notes, which served as the basis for my comments. I testified in opposition on NPI's behalf.
Madam Chair, Members of the Committee:
Good morning. For the record, my name is Andrew Villeneuve. I’m the Executive Director for the Northwest Progressive Institute, a regional strategy center based in Redmond that works to advance the common good through ideas and action.
I am here today to voice our opposition to House Bill 1393. Regrettably, the legislation that the House has sent to the Senate in an effort to protect homeowners from construction defects is itself defective.
In fact, our research indicates it’s worse than defective.
I'd like to draw your attention to Section 14 of HB 1393. The first part reads:
The builder can choose to offer a private, express warranty from companies like the Residential Warranty Corporation (RWC).
In reality, the RWC "warranty" and similar products offer no protection to homeowners. Here is how one New Jersey Superior Court judge described the express warranties sold in New Jersey, which are just like the express warranties that House Bill 1393 requires builders to offer. This is a quote from the decision in Cesard v. D.R. Horton. Emphasis is mine.
Madam Chair, Members of the Committee – House Bill 1393 is not a Homeowner’s Bill of Rights. It does not protect homeowners.
It does not provide justice or economic security.
The bill that passed the House actually makes things worse because it confuses homeowners into thinking they have a safety net when they don’t.
People who have purchased homes with RWC warranties can tell you without reservation that they are entirely worthless.
In 2002, Thurston County Superior Court Judge Richard Strophy heard a case that concerned these private warranties - Bartlet et. ux., et. al. v. Genimi Homes, Inc., et al. (Superior Court No. 02-2-906-6). The case was brought by homeowners who had discovered defects with their homes.
The defendant, Gemini, tried to have the lawsuit dismissed because the warranties required arbitration to be the only legal recourse.
The homeowners argued that the warranties were so awful that they were unconscionable. Judge Strophy agreed, finding the warranties to be unenforceable. The following is an excerpt from his ruling, made on November 1st, 2002.
To close, we need a statutory warranty to protect homeowners – like the warranty proposed in SB 5895, which the Senate approved several weeks ago.
We urge you to reject this bill, or to amend it to incorporate a real warranty that’s there for Washington families in the event of a catastrophe.
Thank you for your time.
The following is a polished version of my notes, which served as the basis for my comments. I testified in opposition on NPI's behalf.
Madam Chair, Members of the Committee:
Good morning. For the record, my name is Andrew Villeneuve. I’m the Executive Director for the Northwest Progressive Institute, a regional strategy center based in Redmond that works to advance the common good through ideas and action.
I am here today to voice our opposition to House Bill 1393. Regrettably, the legislation that the House has sent to the Senate in an effort to protect homeowners from construction defects is itself defective.
In fact, our research indicates it’s worse than defective.
I'd like to draw your attention to Section 14 of HB 1393. The first part reads:
Every contract for the sale or construction of new residential real property shall provide for written express warranties to the purchaser or owner of the residential real property.Section 14 is similiar to New Jersey's existing law, which stipulates that home builders are required to provide a warranty with new homes. The builder, however, gets to decide what warranty is offered, not the homeowner.
The builder can choose to offer a private, express warranty from companies like the Residential Warranty Corporation (RWC).
In reality, the RWC "warranty" and similar products offer no protection to homeowners. Here is how one New Jersey Superior Court judge described the express warranties sold in New Jersey, which are just like the express warranties that House Bill 1393 requires builders to offer. This is a quote from the decision in Cesard v. D.R. Horton. Emphasis is mine.
As I have indicated during the course of oral argument, the homeowner warranty is required by law, but as I used to do when I was practicing, I used to tell my clients in the strongest terms possible, that this is a useless piece of paper. And I truly believe that. Having gone through the process in private practice, with the few clients that wouldn’t listen to me, and did go through with this homeowner warranty and arbitration, it is an utter waste of time if you are a homeowner. The only remedy you actually get is if your house literally falls down on your head, then you will get compensation in satisfaction. Other than that it is just a feel good thing that when people walk away from a closing table, they think they have some kind of a security blanket. They don't.A useless piece of paper.
- Cesard v. D.R. Horton, Docket No. MON-L-3147, Monmouth County, Law Division, Civil Part, Transcript of Decision December 1, 2006.
Madam Chair, Members of the Committee – House Bill 1393 is not a Homeowner’s Bill of Rights. It does not protect homeowners.
It does not provide justice or economic security.
The bill that passed the House actually makes things worse because it confuses homeowners into thinking they have a safety net when they don’t.
People who have purchased homes with RWC warranties can tell you without reservation that they are entirely worthless.
In 2002, Thurston County Superior Court Judge Richard Strophy heard a case that concerned these private warranties - Bartlet et. ux., et. al. v. Genimi Homes, Inc., et al. (Superior Court No. 02-2-906-6). The case was brought by homeowners who had discovered defects with their homes.
The defendant, Gemini, tried to have the lawsuit dismissed because the warranties required arbitration to be the only legal recourse.
The homeowners argued that the warranties were so awful that they were unconscionable. Judge Strophy agreed, finding the warranties to be unenforceable. The following is an excerpt from his ruling, made on November 1st, 2002.
The terms and provisions considered as a whole, in addition to the process required, are significantly one-sided and overly harsh and give the plaintiff buyers little or no effective remedy in many situations. Whether or not any remedy is warranted goes to the merits, and that's not the issue before me at this time. Having given significant consideration the process and the elements of what is and isn't covered and how the plaintiffs would be required to have that determined and responded to in the warranty abritration process with the pre-condition of mediation, all of that, in my view, is substantively unconscionable in light of the entire circumstances, and accordingly, I will on that basis, deny the motion to compel arbitration at this point.(Again, emphasis is mine).
To close, we need a statutory warranty to protect homeowners – like the warranty proposed in SB 5895, which the Senate approved several weeks ago.
We urge you to reject this bill, or to amend it to incorporate a real warranty that’s there for Washington families in the event of a catastrophe.
Thank you for your time.
# Posted by Andrew : 9:40 PM
Comments:
As usual the progressive position is similar to the "King George" position of control by decree.
Home buyers are able to perform due diligence with their purchases and don't need government "controls" to assist them.
Remember the truism, "buyer beware"?
Bill Wickens-
Home buyers are not construction engineers nor are they trained inspectors. Have you torn a house apart to look for the hidden problems? Did a soil test? Groundwater survey? I didn't think so. Neither has anyone else.
Was your automobile/motorcycle built to US safety standards? There are your "decrees" at work.
I hope you never get sick from poisoned food because you didn't do your due diligence inspecting for poor practices or no import regulations.
Or have to rely on yourself to build a road, put out a fire on your house or have a crime perpetrated on you. You might have to rely on government "controls" to assist you.
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