But We Didn’t Sign Any Agreement to Arbitrate Construction Defect Claims?

Construction Defect Claims

The Florida Supreme Court’s recent decision in Hayslip v. United States Home Corp., 2022 WL 247073 (Fla. 2022), highlights the need for home buyers to understand the terms and conditions of their closing documents.  The case involves a home built by U.S. Home Corporation in Lee County, Florida.  As part of the original purchase and sale, U.S. Home gave the buyers a special warranty deed that required any disputes to be resolved by binding arbitration.  The deed stated that it would bind original and subsequent purchasers and that its covenants, conditions, and restrictions would run with the land.

The Hayslips purchased the home from the original buyers.  Several years later, they discovered installation defects in the home’s stucco system and sued U.S. Home in state court.  U.S. Home moved to compel arbitration pursuant to the original deed’s arbitration provision.  The Hayslips argued that the arbitration provision was invalid and could not be enforced against subsequent purchasers.  The trial court compelled the Hayslips to arbitrate.  The Second District Court of Appeal affirmed the trial court’s order and certified to the Supreme Court the issue of the enforceability of the arbitration provision.  The Supreme Court held that the arbitration provision was enforceable.

Even though the Hayslips did not sign an agreement to arbitrate or have any direct dealings with U.S. Home, they were bound to arbitrate based on the prior buyers’ consent to arbitrate.   The Hayslip holding highlights the need for home buyers to carefully review their closing documents and title report before purchasing a home.  Ideally, buyers should have an attorney review the closing documents and explain potentially adverse terms or conditions.

When evaluating a home purchase, buyers should consider how disputes with the homebuilder will be resolved.  An arbitration requirement can make it much more expensive and difficult for buyers to pursue a defect claim.  The parties to an arbitration typically are required to split arbitration costs, which can be thousands of dollars and are significantly higher than a trial court’s filing fees and expenses.  Arbitration provisions also can limit written discovery and depositions that may be needed to prove a defect claim.  Additionally, it is extremely difficult to vacate an arbitration award on appeal.  Accordingly, when buyers are deciding whether to purchase a home, they should consider whether they will be required to arbitrate any construction defect or other claims and whether they want to be bound by such a restriction.