Building or remodeling a home is an exciting experience, the culmination of many months or years of planning and expectations. The building/remodeling process is complex, often extending over a substantial length of time and involving many different individuals – subcontractors, suppliers, lenders, etc. Even the best written contracts, specifications and plans leave room for legitimate interpretational differences. Additionally, differences of opinion during the construction or warranty period may arise.
If a mutually satisfactory solution to a problem cannot be reached between the buyer and the contractor, either party may begin a civil lawsuit, which normally involves a significant amount of time, energy, money and frustration. In an effort to reduce all of those factors, Valley Home Builders Association offers its resources and technical knowledge to assist in resolving construction-related disputes.
VHBA offers assistance to consumers involved in construction-related disputes with association members. However, the association will NOT address complaints pertaining to:
· Monetary disputes under $5,000 (Cases such as these can utilize the Small Claims Court system)
· Libel
· Medical issues
· Construction quality issues occurring more than 12 months after the initial occupancy of new construction or accepted completion of a remodeling project
Communication (Conciliation) Stage
Since the lack of communication is often the principle reason for a construction dispute, VHBA's staff is available to answer basic questions about the construction process and, if necessary, initiate VHBA's dispute resolution procedures. When a written complaint is received by VHBA, it is forwarded to the member that is a party to the complaint. The member is given 15 business days to respond to the owner and/or VHBA regarding intended or completed resolution of the matter.
If the owner is unsatisfied with the member's response, s/he may request VHBA's Complaint Submittal Form, and the formal dispute resolution process will begin. VHBA offers the following dispute settlement mechanisms: Arbitration and Mediation.
Arbitration
The Construction Arbitration Board
The Construction Arbitration Board will arbitrate disputes involving any matter related to building construction utilizing procedures which comply with the Wisconsin Uniform Arbitration Act. The procedure requires the parties at the submittal of the dispute, to sign an Arbitration Agreement under which they agree to be bound by the decision. These procedures provide that the ultimate decision is enforceable in court by either party.
The Board will only arbitrate a construction dispute where there is a written or an oral contract between the parties. The Board does not process warranty complaints involving homes covered by an insured warranty program. However, it does process contractual complaints on those homes, which are not covered under an insured warranty.
The Construction Arbitration Board also handles disputes between the builder and subcontractors or suppliers when the dispute concerns technical performance of the contract.
The Operation Of The Board
The Board consists of volunteers, made up of general contractors, subcontractors and suppliers of the major trades, along with attorneys and accountants. The diverse membership provides specialized expertise and assures a range of opinions in the decision-making process. Board members are volunteers who make a considerable time commitment to serve as inspectors and arbitrators. They receive no compensation or expense allowance.
The number and selection of the arbitrators/inspectors in each dispute is decided by the Board, depending on the complexity of the dispute, the areas of technical expertise required, and the proximity to the building site (on-site inspections are common).
The Board's forte is arbitrating contractual disputes which, because of the custom building nature of this area, are the most common. The use of the Board's expertise generally eliminates the need to pay for expert witnesses as would be required in a court case or even to hire an attorney, although either party may do so.
Fees
The fee for arbitration is $500 for each party to the dispute.
Case Processing Time
Excluding the Communication/Conciliation Stage, the Board requires a minimum of 21 days to assign inspectors and arrange an on-site inspection prior to the hearing. The hearing is generally scheduled within two weeks of the inspection. A final decision will be made after the hearing, typically within two weeks. Approximately 60 days is required for compliance, barring weather delays or material unavailability.
Mediation
Mediation is a rapidly growing form of alternative dispute resolution. In this form of assisted negotiation, parties agree to engage a neutral third party to help find a suitable voluntary resolution. The VHBA Mediation Service was designed to assist homeowners, builders and subcontractors in resolving disputes, both during and after the construction process.
The Role of the Mediator
The mediator's primary role is to help VHBA members and their clients settle their disputes through negotiation. The mediator's responsibilities include information gathering, evaluation and persuasion. He or she also maintains rules of order; moderates discussions; helps set the agenda and makes participants feel comfortable discussing the issues.
The mediator is a member of the Construction Arbitration Board, selected based on the primary concerns of the dispute.
The Mediation Procedure
Mediation is initiated once both parties sign an Agreement to Enter Mediation. The service costs $300 per party. A second mediation session involving the same parties is $350 each. Subsequent sessions are $500 for the party requesting mediation and $250 for the other party. If the parties are unable to resolve their dispute, $100 of the Mediation Service fee is credited against the fee for arbitration before the VHBA Construction Arbitration Board.
After the Agreement to Enter Mediation is signed, both parties should submit a brief written statement of the items in dispute and their position regarding each item. This Position Statement should identify the parties involved; provide factual background; identify the issues and list the problems.
The Position Statement must be submitted at least 5 days prior to mediation. In addition, parties may submit any relevant contracts, plans, specifications, drawings, photographs, statements, invoices, letters and other written materials. Copies of the Position Statement and all written materials submitted will be submitted to the opposing party prior to mediation. A response or follow-up to a Position Statement is permitted, but must be received by VHBA within 2 days of the mediation.
The VHBA Mediation Process is less formal than both arbitration and litigation. There is no formal or informal "discovery" (the legal means by which parties obtain information from other parties). Nor are witnesses permitted without the prior approval of the parties and the mediator. The mediator may consult experts if he or she believes it is in the best interest of the mediation proceeding.
There is no mandatory site inspection; however, a site inspection may be made if the mediator determines it is in the best interest of the proceeding. Photographs may be submitted if they will enhance the ability of the parties to explain their positions.
The Mediation Session
Most mediations begin with a joint meeting during which the mediator explains the process and basic ground rules. Next, each party briefly describes the issues in dispute and the relevant facts regarding their positions. The parties may be represented by counsel, but direct participation is encouraged in order to foster a voluntary settlement. The mediator has the right to ask all parties any questions necessary to gather information about the issues and respective positions and arguments.
Following the joint meeting, the mediator may meet privately with each party to discuss the issues and possible resolutions. The mediator may go back and forth between the parties to discuss various settlement proposals. At some point, the mediator may decide to reconvene the joint meeting to discuss offers of resolution directly with both parties.
The mediation session ends once a Settlement Agreement is signed. The mediator also may end the session if he or she determines that one or both parties are not cooperating or if it appears the mediation process will not result in a settlement. Parties may withdraw from the process at any time by signing a Mediation Session Termination Statement.
The Settlement Agreement
If a settlement is reached, the mediator will immediately draft a handwritten document, which both parties and the mediator must sign. Once the document is signed, it becomes a binding contract.
In some cases, not all issues may be resolved. The Settlement Agreement only records the agreements reached during the mediation session.
Advantages of Mediation
Confidentiality – All documents created and statements made during the mediation process are confidential. They may not be used as evidence in subsequent proceedings without written agreement of the parties that specifically identifies those items that may later be used as evidence. Tape recording or stenographic recording is not permitted.
Time and Money Savings – Civil court cases normally take one to four years to reach court. In contrast, the VHBA Mediation Service can schedule a mediation session within a matter of weeks. The average mediation session lasts 2 to 3 hours, resulting in a valuable time and cost savings.
Preserving Relationships – Disputes may destroy business or personal relationships. That's why the Mediation Service is particularly effective for those with ongoing business relations or those involved in existing projects.
Flexibility to Parties – Because mediation sessions are informal in nature, the parties are left to their own knowledge and creativity to develop mutually acceptable solutions. Those solutions generally are more satisfactory than a resolution imposed by the courts or the arbitration process.
More detailed information regarding VHBA's dispute resolutions processes are available by downloading these PDF files (Adobe Acrobat reader required):
Owner vs. Contractor Procedure
Contractor vs. Owner Procedure
Member vs. Member Procedure
Arbitration Hearing Procedure
Mediation Procedure
