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Question:
Is it better to use arbitration through a local building association as I have seen in some remodeling contracts, or is the legal system the best route? How can I trust that I will receive a fair
shake in arbitration? Also, how much does it cost?
Answer:
For those readers who may not be familiar with the term, arbitration is a process in which disputes are settled through mediation by an unbiased and
knowledgeable third party. Having said that, I can now say that arbitration is ALWAYS a better choice than the legal system for both sides, and I think most judges would agree.
It is a misnomer that builders or
remodelers are all buddies who (wink-wink) help each other out in disputes. We contractors realize that if the building and remodeling industry is to police itself successfully, we must be more than fair in dispute settlements.
I say that because in my opinion it is the contractor that is actually at a slight disadvantage in most arbitration cases, not the consumer. That's not to say that the builder doesn't realize this going in, they do, and it's
STILL a better option than going to court. The burden of proof most often falls on the contractor, and maybe that's the way it should be. However, most people feel the opposite is true.
I am aware of three local
arbitration panels who might be listed as a dispute settlement source in a construction contract. In all cases the contractor must be a member of that association to utilize their service. The first is the National Association
of the Remodeling Industry (NARI) who has an ethics committee which oversees arbitration cases. At the present time the fee's range from $100
to $500 per party (depending on the dollar value of the job), which is very reasonable for the service provided.
The next is the Metropolitan Builders Association (MBA) which provides the same service through their
Construction Arbitration Board (CAB). The fee here is $500 per side.
The next is the Better Business Bureau (BBB) "We care" plan. Again, providing a dispute settlement service using mediators who are
knowledgeable in construction. There is no fee for either party here, but the contractor must be a member of the BBB, and have gone through their screening process to utilize this service.
There are also national
arbitration services such as the National Academy of Conciliators (NAC) or the American Arbitration Association (AAA) to name a couple, but my attorney has told me that these national firms are more expensive than local
sources, and rocks grow faster than they move.
One more note; don't bother going to court if you loose an arbitration case. The judge takes the arbitration panel's findings very seriously in his deliberations, and would
probably become irritated even hearing the case.
In my opinion, your contractor is providing a valuable service to you by setting up arbitration as the dispute settlement procedure right in the contract. If the consumer
only realized the excellent sources of arbitration we have here locally, and how fair they really are, there would be a lot less cases going to court.
Answered by: Patrick Benkowski, CR
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