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Arbitration clauses and non-disclosure agreements in Nevada construction disputes can potentially harm the rights of homeowners when they are seeking remedies for construction defects. While proponents of arbitration clauses claim that they help to make the claims process faster and protect both builders and homeowners, consumers are at a disadvantage when they arbitrate their claims instead of pursuing legal remedies in court. Arbitration agreements and NDAs are commonly used in the construction industry, and they have the effect of keeping disputes and outcomes out of the public’s eye. This means other consumers may not have good information about the workmanship and quality of a builder.
Why Arbitration Agreements Are Problematic
Arbitration clauses mandate that the parties to the contract settle their disputes in arbitration instead of through a court of law. These types of provisions force consumers to waive their right to a jury trial. While court proceedings are a matter of public record, arbitration is held outside of the court process. Arbitrators are third parties that are supposed to be neutral. When an arbitrator issues his or her decision, the matter is final, binding, and usually confidential. This means that a consumer who is unhappy with the outcome of arbitration will not have further legal redress available to him or her. Frequently, the construction company will get to choose the arbitrator and set the terms of the process through the sales contract, placing the homeowner at a greater disadvantage because the builder will often choose someone who they know and have probably had experience with in the past. An arbitrator who frequently works on arbitration matters after being hired by a construction company may also be more likely to issue rulings that favor the company over the homeowners during disputes. This frequently leads to consumers receiving arbitration verdicts worth far less than what they would otherwise be entitled to recover in Court. Unfortunately, consumers will sign arbitration clauses as part of their purchase agreement without even knowing the rights that they are waiving.
Non-Disclosure Agreements Plus Arbitration
While the proceedings in arbitration are often held in secret, the parties can still talk about what occurred unless they are prohibited from doing so by non-disclosure agreements. Frequently, construction companies may offer unreasonably low settlements in exchange for the consumers’ agreement to sign non-disclosure agreements or will include unreasonable confidentiality provisions in proposed settlement agreements. When a consumer signs an NDA, he or she will be prohibited from discussing the settlement or what happened in his or her case. This prevents others from understanding the nature of the company’s work and its history, potentially leading to harm.
Before people enter into contracts to build or purchase homes, they should carefully review everything that is contained in the proposed contracts and strongly consider consulting an attorney prior to signing such a contract. If a company offers a warranty, it should be reviewed to see if there is any limiting language that might conflict with state law. Careful consideration should be given before signing any contract with arbitration or NDA provisions that limit one’s rights.