How D.R. Horton Uses This Clause
D.R. Horton purchase agreements have been documented to include mandatory binding arbitration provisions. Disputes must go to private arbitration instead of court, typically using an arbitrator selected through a process the builder influences. Buyers lose their right to a jury trial, public proceedings, and in many cases the ability to appeal an unfavorable decision. This clause has been the subject of litigation, including Smith v. D.R. Horton, Inc..
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies. Because D.R. Horton operates across multiple states, the enforceability and practical impact of this clause varies depending on where the home is located.
D.R. Horton's scale means contract templates are largely standardized across its operations. A clause identified in one market's contract is likely present in other markets' contracts, though local addenda may modify the terms.
Builder-Specific Details
Combined with Habitability Waiver
Challenges to the habitability waiver must be pursued in arbitration rather than court.
Standardized Across Markets
D.R. Horton's scale means contract templates are largely standardized across its operations. This clause identified in one state's contract is likely present in other states' contracts, though local addenda may modify the terms.
Standard Form Contract
This clause appears in D.R. Horton's standard purchase agreement, which is generally presented on a take-it-or-leave-it basis. Buyers typically have limited ability to negotiate individual terms, though making the request in writing is still advisable.
Legal History
The following cases involve D.R. Horton's use of this clause type.
Smith v. D.R. Horton, Inc.
The South Carolina Supreme Court found several contract provisions unconscionable, including language stating the builder "shall not be liable for monetary damages of any kind" and a waiver of the implied warranty of habitability. The court also found the arbitration agreement was a contract of adhesion, noting the extreme imbalance of bargaining power between the national builder and individual homebuyers.
Louisiana Class Action
Homeowners allege that HVAC units installed in their D.R. Horton homes cannot adequately handle Louisiana's humidity, resulting in persistent mold and condensation issues. D.R. Horton moved to compel arbitration; the judge denied the motion, allowing the case to proceed in court.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects D.R. Horton's operating states.
| State | Status | Note |
|---|---|---|
| Texas | Likely Enforceable | Mandatory arbitration clauses in Texas new construction contracts are likely enforceable. Texas has... |
| Florida | Likely Enforceable | Mandatory arbitration clauses in Florida new construction contracts are likely enforceable. Florida... |
| South Carolina | Uncertain | The enforceability of mandatory arbitration clauses in South Carolina new construction contracts is... |
| North Carolina | Likely Enforceable | Mandatory arbitration clauses in North Carolina new construction contracts are likely enforceable.... |
| Arizona | Likely Enforceable | Mandatory arbitration clauses in Arizona new construction contracts are likely enforceable. Arizona... |
| Georgia | Likely Enforceable | Mandatory arbitration clauses in Georgia new construction contracts are likely enforceable. Georgia... |
| Colorado | Likely Enforceable | Mandatory arbitration clauses in Colorado new construction contracts are likely enforceable.... |
| Nevada | Likely Enforceable | Mandatory arbitration clauses in Nevada new construction contracts are likely enforceable. Nevada... |
| California | Uncertain | The enforceability of mandatory arbitration clauses in California new construction contracts is... |
| Virginia | Likely Enforceable | Mandatory arbitration clauses in Virginia new construction contracts are likely enforceable.... |
| Tennessee | Likely Enforceable | Mandatory arbitration clauses in Tennessee new construction contracts are likely enforceable.... |
| Alabama | Likely Enforceable | Mandatory arbitration clauses in Alabama new construction contracts are likely enforceable. While... |
| Maryland | Likely Enforceable | Mandatory arbitration clauses in Maryland new construction contracts are likely enforceable.... |
| Louisiana | Likely Enforceable | Mandatory arbitration clauses in Louisiana new construction contracts are likely enforceable.... |
| Hawaii | Likely Enforceable | Mandatory arbitration clauses in Hawaii new construction contracts are likely enforceable. Hawaii... |
Related Clauses in D.R. Horton Contracts
This clause often works in combination with other provisions in D.R. Horton's purchase agreements.
Challenges to the habitability waiver must be pursued in arbitration rather than court.
The class action waiver and arbitration clause work together to ensure all disputes are handled individually in private proceedings.
Disputes over deposit forfeiture must be resolved through arbitration, where the cost of pursuing a claim may exceed the deposit amount.
Even if an arbitrator finds in the buyer's favor, the liability cap may limit the award.
What Buyers Can Do
- Understand the arbitration process before signing. Review which arbitration provider is specified, who selects the arbitrator, and whether you have any right to appeal. These details significantly affect the fairness of the process.
- Research the arbitration provider's track record. The specified arbitration provider may have a history with builder disputes. Understanding the provider's procedures and typical outcomes can help you prepare.
- Review the Smith case. The Smith v. D.R. Horton, Inc. ruling may be relevant to your situation. If you are buying a D.R. Horton home in a state with similar legal protections, this precedent could affect the enforceability of this clause.
- Have the full contract scanned before signing. This clause is often one of several interconnected provisions in D.R. Horton contracts that collectively limit buyer remedies. A contract scan can identify all of them.