Proposition 201

Home Owners Bill of Rights “Proposition 201”
Nov 4, 2008 is the date when Arizona State citizens will go to the polls and exercise their right to vote. This year there is 8 propositions that plan to change mayor laws that are currently in place, and give voters in Arizona an opportunity to vote to either keep the current laws, or change them for new ones. As a Real estate licensee, I have been working in Arizona for over 3 years, and the proposition 201 “The homeowners bill of rights” is the one that got my attention, not only because this new law could affect some of my family members and clients, but also because I am a homeowner myself, and as with many other people, I bought a new house from a homebuilder. This new proposition that was crafted and financed by the Sheet Metal Workers International Association, in one of the key arguments, plans to give new homeowners the peace of mind that their new home will be safe and secure for years to come, with a home warranty for 10 years; moreover, proposition 201 bundles together 12 arguments that if approved, will significantly change the laws that are currently in place. In order to better understand and have a clear vision of what is this proposal trying to achieve; first we have to have a basic knowledge of what is the law now, vs. what will be if the bill passes, how it will affect the current market, and finally how to be prepared for the new changes.
The proposition 201 plans to change the current laws about Home warranties. Some of the key points on this proposition are the facts that after approval of the ballot, the new law will actually require new home builders to provide a 10 year warranty on all new homes; the current law now states that builders are only required to provide 1 year of limited warranty; the 10 year warranty proposal will have the same coverage as the one for 1 year. If approved, a homebuyer can get any repairs that the house may need covered by the warranty during those 10 years, with the only exception of appliances, normal wear and tear, natural causes and or disasters. As a Homeowner I strongly agreed with this point, because most if not all of the new houses start to have problems after the second year, for example what builders call the “settling” that builders claimed starts two or three months after construction, in reality starts between the 10th and the 20th month after construction this is according to the National Association of constructors. Home page. October 2008 www.NAC.gov.Home builders will not mention the statistics showed above, they will only limit themselves to disclose certain things, like this paragraph taken from an actual contract made by Company X, where they state that “ settling may cause that patios, concrete, walks, and drives will be subject to cracking due to the expansion and contraction of the concrete and/ or soil”.( Company X, 2006) so if that is the case, there should not be any reason of why all the new home builders “ trap” the eye of potential home buyers with tile or wood floors on their model homes, and encourages them to buy and immediately install all of these products, adding them to the price of the house for huge profits. I asked myself why would any responsible builder that proud themselves on delivering houses with slogans like “build to last” as they state on their cheap propaganda do something like that, knowing that the floor on most of these new houses will eventually crack, and therefore destroy all the new tile or wood floors?.New home builders actually cover themselves with a paragraph written on fine printing on their contracts that states “Buyer releases seller of any and all liability or responsibility to replace or repair the tile or grout should they crack or otherwise became dislodged” taken from a Company X Contract (Company X 2006) No wonder they are aggressively fighting together with all of the other home builders against this bill, and this specific issue, because if they were to lose, this will mean huge losses on “extras” that they sell together with the new house. Another key argument on this new proposal is that Home owners will get to decide who fixes the house, the actual warranty law states that the home builders will use their own subcontractors to fix the houses. In this case new home builders cover themselves with an article that all of them have on their contracts that states “Seller will not cover any repairs made by an outside contractor” (Company X, 2007). As a Realtor I was able to see that many of this subcontractors will only fix the repairs for a “temporary” time frame, sometimes during my career, I saw jobs that usually will take a professional some hours, be done in minutes; on one occasion, I decided to ask one of this subcontractors that worked for the builder, and was doing a repair on a home that I was listing for sale, why they were always on a hurry? He replied stating that builders have a “Time per work” sheet of guidelines, where builders have already determine how long a repair should take, meaning that if a repair take the subcontractor 10 hours, and on the builders sheet that work should only take 5 hours, the subcontractor will only get paid for the 5 hours according to their contract with the builder. I strongly agreed with this initiative as well, because homeowners should be allowed to have their home fixed by who they think will do a good and lasting job for them, there are hundreds of subcontractors that won sign up with the builders because of these “guidelines” that only destroys the reputation of the subcontractor business.
The expectations that this bill is rising are huge among potential buyers, but also trial lawyers, because according to the current law, “Arbitration” should be the way of solving disputes between home owners and home builders, the new law proposes that “Litigation” should be the way of solving these disputes if the bill is approved. This proposal is raising many questions to whether litigation will make things better or not. With the current law, if a homeowner takes a homebuilder to court and loses the case, he or she will be liable for all the court cost, that in many cases are hugely substantial because of the complex process that this type of cases required, and also because homebuilders, usually have complete teams of lawyers working for them, and they all want to get paid for their time; Most of the time if not all the time buyers never get to this point, because the chances of winning are very slim, and in many cases none. In the other hand, the new proposal will directly force homeowners and homebuilders to go and solve their disputes in front of a judge, and also will not require that the loser whoever ends to be, to pay the court costs for the winner; what this will cause is that litigation will be a thing of every day, with trial lawyers taking homebuilders to court for almost any reason they can find. I strongly disagree with this initiative, because it will create a “chaos” between the populations; on one side we will have homebuilders rising prices of homes and services to cover possible lawsuits, and in the other hungry trial lawyers that will find any reason to take homebuilders to court, This type of situation will cost our judicial system thousands of dollars on extra hours for judges, and court people, and also will mean huge expenses coming from both sides of the coin, homebuilders and homebuyers. According to an article written for the AZ Central newspaper “This new law will make unscrupulous trial lawyers to get rich using homeowners money” John Stamos. “Litigation.” The Arizona Central 15 august 2008. I believe that this will actually be the case, an unprecedented over abuse of the system, based on personal enrichment.
Our country is actually going thru a financial meltdown, the housing market continues to go down, and seems like it will stay like that for years. Most of this crisis is attributed to fraudulent mortgages and loans, and what proposition 201 will try to do is to fix some of the “cracks” on the system that allowed unscrupulous people to get rich overnight. Among many great arguments that this bill proposes, proposition 201 will require homebuilders to disclose the relationships with financial institutions, because with the actual law, they are not required to disclose such information. This requirement will be greatly beneficial to avoid fraud, in my years as a Realtor, when a buyer used to go to a builders office and submit an application to buy a house, builder always will state that if their lending institution was not going to be able to approve them, they will immediately look for another lender, without disclosing their names, what this caused was that few days after the application was submitted, in almost all cases, the bank that they advertise on their windows usually was a well know institution, will deny the application, but builders had “other institutions” that were ready to approved them; After many of these cases, what I found out from a Realtor that worked for Company X, was that the builders gets a percentage per every customer that they send to these other institutions, meaning that they were not only profiting with overpriced houses, but also they were knowingly committing fraud by having these lenders approved cases that were unapprovable by well know lending institutions. I strongly support this point on the ballot because it is time to stop this activity; also this new proposition prohibits the builder’s agent form filling up mortgage applications, whereas with the actual law, realtors working for builders can actually make the paper look “good”. In other words Realtors working for builders have the ability of filling buyers applications, in order to make unqualified buyers look good in paper, sometimes “ increasing, erasing, changing” facts that otherwise will be rejected by banks. Both of these great changes will absolutely help prevent more fraud that has already destroyed the housing market.
Proposition 201 looks to change the current laws that helped destroy Arizona promising housing market. What once was the fire of the west is now only ashes that struggle to survive; changes are urgently in need in order to save Arizona from a mayor crisis. The upcoming elections on November will be perhaps the opportunity that all of us were waiting for to have our voices to be listen by the government, the current laws are not only destroying everyone’s American dream, but they are also threatening to expand and destroy the dreams of our children; action must be taken now in order to have the change that we all need, I strongly support this proposition, because I had seen what unscrupulous institutions, and people can do to take advantage of hard working people, and I think that this is our chance to help our Arizona recover from its ashes and be once more the state that we all love and proudly live on.
*The name of home builders was replaced by company X*