CDRS HOME WARRANTY ARBITRATION PROCEDURES

THIS SECTION OF THE CDRS WEBSITE APPLIES ONLY TO ARBITRATION REQUESTS FROM HOME WARRANTY COMPANIES (HWC). INDIVIDUAL HOME WARRANTIES PROVIDED BY BUILDERS MUST FOLLOW THE CDRS GENERAL ARBITRATION PROCEDURES IN REQUESTING THAT CDRS PROVIDE ARBITRATION SERVICES.

EACH HOME WARRANTY COMPANY HAS A DIFFERENT PROCESS TO FOLLOW TO UTILIZE THEIR ARBITRATION SERVICES THAT MAY DIFFER SLIGHTLY FROM THE PROCEDURES SPECIFIED BELOW.

PLEASE KEEP IN MIND THAT THE SOLE RESPOSIBILITY OF THE ARBITRATOR IS TO ENFORCE ALL PROVISIONS OF THE WARRANTY INCLUDING FILING TIME REQUIREMENTS, THE CONSTRUCTION STANDARS, AND ALL OTHER REQUIREMENTS OF THE WARRANTY.

NEW JERSEY, MARYLAND AND CALIFORNIA ARBITRATIONS – PLEASE SEE THE STATE ARBITRATION INFORMATION SECTION ON THIS WEBSITE

CONTACT HOME WARRANTY COMPANY

The first step in commencing the arbitration process with a HWC is to contact the HWC and submit a request for arbitration in a timely manner as specified in the warranty booklet utilizing the forms provided by the HWC. The HWC warranty booklet may suggest the names of “approved” arbitration providers for you to utilize. If the warranty booklet does not specify available arbitration providers, the warranty company should suggest or specify an arbitration provider who will handle your claim.  The HWC will forward to CDRS, a request for one of the five possible home warranty arbitration processes specified below. According to the warranty booklet, you might be required to forward a check payable to CDRS or your warranty company to cover your portion of the required minimum non-refundable arbitration fees.

The homeowner shall be the Claimant.  Most HWC require the builder to be listed as the Respondent during the first (and/or second year) of the warranty period and the HWC to be listed as the Respondent during the second and/or third through the tenth year of the warranty period. Some HWC also list the builder as a Respondent during the second and/or third year through the tenth year. Please check with the HWC to determine who should be listed as the Respondent. (There is no Plaintiff or Defendant as utilized for litigation cases.)

CDRS will commence the Home Warranty arbitration process after CDRS has received the required arbitration request paperwork and required minimum deposit from the HWC unless other arrangements have been made between the HWC and CDRS. As it is the obligation of the homeowner to demonstrate to the arbitrator that the condition of the claim meets the requirements to be covered by the warranty.  Note that the homeowner is required to provide a “CONSTRUCTION DEFECTS TO BE ARBITRATED form that provides CDRS with the applicable sections of the warranty booklet or other documents that covers the homeowner’s claims. This information might be provided by the HWC to CDRS.

The HWC generally provides CDRS with the basic information that is necessary to commence the arbitration process.   The parties are afforded the opportunity to submit to CDRS (and the opposing party) any additional information that they would like the arbitrator to review prior to the arbitration hearing.

 
CDRS ARBITRATION INITIATION
Upon receipt of the Request and the appropriate fees from the Home Warranty Company, CDRS will assign an arbitrator based on the geographic location of the homeowner’s residence, the nature of the dispute, the construction experience and qualifications of the arbitrator and the availability of the arbitrator. CDRS will then forward to the appropriate Parties, a letter that specifies and appoints the arbitrator and outlines the process to be followed in conducting the HWC arbitration process. The letter will also include the rules and procedures of the arbitration process along with other related information including suggested dates to hold the arbitration hearing at the residence of the homeowner, if applicable.

Should a “documents only” arbitration be appropriate as per the CDRS Home Warranty Arbitration Rules and Procedures, CDRS will notify the Parties of the process to follow. 

Note that CDRS will communicate via email with all parties or via telephone should it be appropriate. CDRS will utilize the email addresses of the homeowner and the builder that is provided by the HWC to CDRS. Should either or both Parties be represented by counsel, the attorney’s email shall be utilized, and the emails of the attorney’s client will not be utilized unless it is requested by the attorney. As it is important for all Parties to receive all emails from CDRS, CDRS requests all Parties to acknowledge receipt of all emails from CDRS.  CDRS will likewise reply to all emails from the Parties indicating that CDRS has received the email.

CDRS DATE SELECTION:
After CDRS receives the date selections of the Parties as specified in the first email/letter from CDRS to the parties, hopefully, all Parties will have selected at least one common date for the arbitration hearing that is convenient for all of the Parties. Should the Parties not agree on a date to hold the arbitration hearing, CDRS will obtain new suggested dates to hold the arbitration hearing from the arbitrator which will be forwarded to the Parties for their agreement. If both Parties cannot agree on a convenient date, CDRS Home Warranty Rules and Procedures allow CDRS to select the date and time for the arbitration hearing. The arbitration shall take place in the homeowner’s residence unless all Parties and the arbitrator agree to hold the hearing at another location.  

CDRS NOTICE OF ARBITRATION HEARING
After CDRS has obtained the agreed upon date to hold the arbitration hearing from the Parties, CDRS will then send a “Notice of Arbitration Hearing” to the Parties that will specify the date, time and location of the arbitration hearing along with other related information. CDRS will request that the Parties sign and return the Notice to CDRS.

ARBITRATION REMINDER:
CDRS will send out a reminder to the Parties within the week prior to the scheduled arbitration hearing. The homeowner will be reminded that it is the responsibility of the homeowner to demonstrate to the arbitrator that the claim is covered by the applicable warranty. It is not the responsibility of the arbitrator to search and find the applicable section of the warranty in the warranty booklet. 

THE ARBITRATION HEARING
There are five different types of arbitration hearings:

The two standard arbitration hearings are “Covered or Not Covered #1 - followed by the “Compliance #2” arbitration hearing if required.

1. Covered or Not Covered – The sole responsibility of the arbitrator is to determine if an issue in dispute is covered or not covered by the HWC warranty as specified by the Construction Standards in the warranty booklet or as specified in other documents referenced in the warranty booklet. The question of whether an item is covered by the HWC rests entirely on what is specified in the HWC Warranty booklet (booklet) that was issued at the time that the warranty was purchased. The homeowner should be required to submit a CONSTRUCTION DEFECTS TO BE ARBITRATED form that specifies the applicable sections of the warranty related to the claims submitted. The arbitrator’s responsibility is to interpret if the claim meets all of the requirements to be covered as specified in the warranty booklet. As an example, if the booklet specifies that there are three conditions that must be met in order for a claim to be called a “major structural defect”, if only one or two of those conditions have been met, the arbitrator must declare that item as “not covered” as all three requirements have not been met. If there were several claims in dispute between the HWC/builder and the homeowner, the arbitration award will consist of a list of those disputed claims as covered or not covered by the warranty. The arbitrator will not give any reason for his/her decision other than to reference to the applicable section of the coverage booklet that he/she used in rendering his/her decision or if the arbitrator decides that a decision of the arbitrator needs clarification, he/she may provide additional reasoning of his/her decision.  CDRS generally allows the builder approximately 60 days from the date of issuance of the arbitration award by CDRS for the builder to properly address the covered claims from this first arbitration hearing.  Should the parties mutually not wish to physically address the covered claims, they should consider utilizing the “cash settlement” arbitration process specified below.   It is not unusual to have the parties not wish to deal with each other in the future.
2. Compliance – Should the homeowner decide that the builder or HWC has not properly addressed the covered claims from the first arbitration award within the time period allowed by the arbitrator, a compliance arbitration hearing can be requested to the warranty company to determine if the builder or HWC has properly addressed the covered claims from the first arbitration hearing.  Please refer to the CDRS “Home Warranty Arbitration Rules and Procedures” for additional information on the responsibilities and decisions allowed by the arbitrator.

3. Method of addressing the covered items - After the “compliance” arbitration award is issued, the HWC or the builder will contact the homeowner to discuss and plan for the repair, replacement or applicable treatment, including a cash settlement, that they will take to correct the claims that were specified as “covered” in the arbitration award. If for any reason, the homeowner does not agree with the manner selected by the HWC or builder to address the covered claims, it may be necessary to return to arbitration to have the neutral arbitrator decide on the appropriate method to remedy the claim in question. The same arbitrator may be utilized depending on the technical construction knowledge and availability of the arbitrator. If applicable, the arbitration may be handled by a “documents only” or “virtual” arbitration which will not require the arbitration hearing to be held at the residence.
4. Cash Settlement  - There are two types of cash settlement arbitrations: (NOTE: Cash settlement arbitrations required the mutual agreement of both parties to commence a cash settlement arbitration)  CDRS will specify the process to follow for the cash settlement arbitration including but not limited to documents only, virtual or in-person.

   (a) Post arbitration award - After an arbitration award is issued by CDRS to the parties, rather than the parties dealing with each other to address the covered claims as appropriate, the parties may wish to settle their dispute through a cash settlement offer.   If the parties can’t agree on a specific monetary amount, it can be submitted to the arbitrator who will render his/her decision specifying the exact monetary amount that the builder or home warranty company must pay the homeowner including a time period for the payment to be remitted to the homeowner.  The arbitrator decision will be somewhere between the monetary offer provided by the builder or HWC and the requested monetary amount from the homeowner.  Note that a cash settlement arbitration can be requested after the first “coverage arbitration” or after a “compliance arbitration” if applicable.

   (b) Prior to arbitration hearing – Should the parties decide to not utilize the coverage arbitration process and would rather settle their claims through a monetary settlement, they may submit a request for a cash settlement arbitration to have the arbitrator decide on the monetary settlement amount to address the construction defects that the parties agree to be addressed in the cash settlement arbitration.

NOTE:  If the parties request a cash settlement arbitration that involves a builder, the responsibility of the warranty company to address the homeowner claims concludes related to those claims only.   If the payment by the builder is not paid by the date specified by the arbitrator in the award the HWC has no responsibility to make the payment to the homeowner.  If the homeowner and a warranty company agree to settle their claims through a cash settlement arbitration, the warranty company is responsible for the monetary amount specified by the arbitrator in the cost settlement arbitration award.  Only the claims addressed in the cash settlement award are eliminated from any future action by the parties.

5. Quality of corrective action – After the repairs, replacement or applicable treatment of the covered claims is complete, if the homeowner is not satisfied with the quality of the work performed or with the quality of the materials used, it again may be necessary to return to the arbitration process to allow the arbitrator to decide if the repairs were completed according to the agreement with the HWC/Builder and the homeowner and no longer would be considered as a covered claim according to the warranty booklet. Please keep in mind that any procedures specified in the HWC booklet that were in effect at the time of the purchase of the warranty will take precedence over any current industry guidelines that may be now specified by a manufacturer or other neutral organization.

Remember that the decisions of the arbitrator are “final and binding” on all parties and is not subject to appeal other than on certain very limited procedural grounds as specified in the CDRS General Arbitration Rules and Procedures.  All arbitration awards shall be “unreasoned” and shall specify the award without providing a specific reason for the decision of the arbitrator other than referencing to the appropriate section of the HWC booklet used in the arbitration.   If the arbitrator decides that an issue needs an explanation or a clarification, the arbitrator may add this information to the arbitration award.

COST AND PAYMENT OF THE ARBITRATION PROCESS
Although many HWC policies specify various methods of handling the costs and payments related to the arbitration process, the following are the standard methods generally followed by the HWC industry.

1. In most cases, the homeowner or person filing the request for arbitration is required to pay all up-front non-refundable costs related to the arbitration process with the understanding that the arbitrator may re-allocate the CDRS arbitration fees as part of the arbitration award. If the arbitrator determines that the majority of claims in dispute or the major claims in dispute were decided in favor of the homeowner, the homeowner may be reimbursed for the CDRS expenses and deposits paid up-front by the homeowner, if allowed in the HWC booklet.  If the arbitrator determines that the builder or HWC was the prevailing party and was correct in most of the disputed claims, the homeowner will not be reimbursed for the expenses they paid up-front, however, the arbitrator may, as part of the award, allocate the CDRS expenses to the parties in any percentage or in any manner that he/she determines to be appropriate.
2. In most instances, the homeowners will be required to first pay a non-refundable filing fee and a non-refundable arbitrator fee to cover the cost of the arbitration process to be submitted with the HWC “Arbitration Request”. Although it rarely occurs, after a review of that request by CDRS, the homeowner or appropriate party may be required to submit an additional deposit covering the estimated cost of the arbitration that will be determined by the number of items in dispute, the complexity of those items, the distance that the arbitrator may have to travel to the residence and other expenses related to the arbitration.  Non-payment of the requested additional fee within the time limit specified by CDRS may delay the commencement of the arbitration process including the arbitration hearing.
3. Within 30 days of the conclusion of the arbitration hearing, the arbitrator will submit the “Arbitration Award” to CDRS along with a recap of his/her fees and expenses. If the deposit received by CDRS that was paid by the homeowner (and/or builder or HWC) covers or exceeds the total costs of the arbitration process, the arbitration award will be issued to the Parties. If the deposit was not adequate to cover the total costs of the arbitration, CDRS will invoice the appropriate Party(s) for the amount that is due. The arbitration award may not be issued to the Parties by CDRS until the amount due is paid in full. (Please check the CDRS Arbitration Rules and Procedures for additional information on alternative payment options related to the issuance of the arbitration award.)