The purpose of this act is to encourage the settlement of claims and to punish parties who refuse to accept reasonable offers of settlement. As a practical matter, a homeowner association's costs for expert witnesses and litigation is already a strong consideration in the initial decision whether to start litigation. The added factor of having to cover the builder's post-settlement offer expenses creates an even stronger incentive for the home owner to avoid unnecessary litigation and to accept a builder's reasonable settlement offer. Forced arbitration undermines home buyers' rights. AB 600 allows builders to impose pre-dispute arbitration on homeowners.
Arbitration can work for consumers if it is freely chosen after a dispute has arisen.
The practical effect is that homeowners will be at the mercy of home builders and their insurers when the home buyer seeks the repair of construction defects under the warranty. The obvious disincentive for builders to fix their own costly construction defects should raise an alarm about the developer's drive to eliminate home buyers' legal remedies for construction defects. Home buyers will be disadvantaged in the actual arbitration process. Once in arbitration the consumer is at a severe disadvantage. The average home buyer lacks specific knowledge of building codes and other relevant expertise.