New Rules Designed for Home Construction Disputes
The American Arbitration Association (AAA) on June 1 put into effect a set of rules designed specifically for home construction disputes.
Recognizing the expense of resolving a dispute arising out of the construction of a home, the rules provide home owners and builders with options designed to keep costs down and minimize the amount of time to come to an agreement.
The “Home Construction Arbitration Rules and Mediation Procedures” are suggested by the AAA for mediation and arbitration provisions in home building contracts because they will provide both parties with a fair and cost-effective means of resolving the dispute.
“The AAA recommends that parties continue to attempt direct negotiations to resolve their problem and recommends using mediation under these rules whenever possible,” according to the introduction of the rule document. “But if negotiations fail, the AAA’s Home Construction Rules provide the parties with a hearing by an impartial arbitrator who will make a ruling (award) that is binding.”
Under the rules, claims and counterclaims are divided into levels so that the process can fit the size of the claim. Parties can mediate and try to resolve the claims themselves without an arbitrator deciding the issues, and the rules provide varied arbitration options, including document-only, telephone and in-person hearings.
Considered an extension of the negotiation process, mediation is a process in which parties submit their dispute to a neutral mediator who works with them to reach a settlement of their dispute.
Mediators don’t have the authority to decide issues; they simply assist the parties in reaching an acceptable settlement by probing the motivations and concerns of the parties in an effort to find a basis for resolving the dispute.
The most common advantages of mediation, according to the AAA:
- Parties are directly involved in negotiating the settlement.
- The mediator, as a neutral third party, can view the dispute objectively and can assist the parties in exploring alternatives that they might not have considered on their own.
- Because mediation can be scheduled early in the dispute, a settlement can be reached much more quickly than in litigation.
- Parties generally save money through reduced legal costs, especially costs associated with discovery and trial preparation.
- Parties enhance the possibility of continuing their business relationship with each other.
- Creative solutions or accommodations of special needs of the parties can become a part of the settlement.