How Lennar Uses This Clause
Lennar purchase agreements have been documented to include mandatory binding arbitration provisions. Disputes must be resolved through private arbitration rather than in court, with the builder often selecting the arbitration provider. This eliminates the right to a jury trial and typically limits discovery, making it harder for buyers to build a case. This clause has been the subject of litigation, including Damico v. Lennar Carolinas.
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies.
Lennar'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.
Standard Form Contract
This clause appears in Lennar'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 Lennar's use of this clause type.
Damico v. Lennar Carolinas
Construction defect case arising from The Abbey development in Berkeley County. The South Carolina Supreme Court found the arbitration provision unconscionable and declined to sever it on public policy grounds, describing the purchase agreement as a contract of adhesion that buyers had no meaningful ability to negotiate.
Seminole Tribe of Florida v. Lennar
The Seminole Tribe alleged that 552 homes built by Lennar were defective, with many rendered uninhabitable. Roofing issues were so severe that full replacements were required. Lennar moved to compel arbitration. The Tribe described damages in the tens, if not hundreds of millions of dollars.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Lennar'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... |
| California | Uncertain | The enforceability of mandatory arbitration clauses in California new construction contracts is... |
| Arizona | Likely Enforceable | Mandatory arbitration clauses in Arizona new construction contracts are likely enforceable. Arizona... |
| 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... |
| North Carolina | Likely Enforceable | Mandatory arbitration clauses in North Carolina new construction contracts are likely enforceable.... |
| South Carolina | Uncertain | The enforceability of mandatory arbitration clauses in South Carolina new construction contracts is... |
| Georgia | Likely Enforceable | Mandatory arbitration clauses in Georgia new construction contracts are likely enforceable. Georgia... |
| Virginia | Likely Enforceable | Mandatory arbitration clauses in Virginia new construction contracts are likely enforceable.... |
| Maryland | Likely Enforceable | Mandatory arbitration clauses in Maryland new construction contracts are likely enforceable.... |
| New Jersey | Likely Enforceable | Mandatory arbitration clauses in New Jersey new construction contracts are likely enforceable,... |
| Tennessee | Likely Enforceable | Mandatory arbitration clauses in Tennessee new construction contracts are likely enforceable.... |
| Minnesota | Likely Enforceable | Mandatory arbitration clauses in Minnesota new construction contracts are likely enforceable.... |
| Washington | Likely Enforceable | Mandatory arbitration clauses in Washington new construction contracts are likely enforceable.... |
| Oregon | Likely Enforceable | Mandatory arbitration clauses in Oregon new construction contracts are likely enforceable. Oregon... |
| Illinois | Likely Enforceable | Mandatory arbitration clauses in Illinois new construction contracts are likely enforceable.... |
| Indiana | Likely Enforceable | Mandatory arbitration clauses in Indiana new construction contracts are likely enforceable. Indiana... |
| Pennsylvania | Likely Enforceable | Mandatory arbitration clauses in Pennsylvania new construction contracts are likely enforceable.... |
| Idaho | Likely Enforceable | Mandatory arbitration clauses in Idaho new construction contracts are likely enforceable. Idaho has... |
| Alabama | Likely Enforceable | Mandatory arbitration clauses in Alabama new construction contracts are likely enforceable. While... |
| Utah | Likely Enforceable | Mandatory arbitration clauses in Utah new construction contracts are likely enforceable. Utah has... |
Related Clauses in Lennar Contracts
This clause often works in combination with other provisions in Lennar'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.
Warranty disputes with third-party administrators may also be subject to mandatory arbitration.
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 Damico case. The Damico v. Lennar Carolinas ruling may be relevant to your situation. If you are buying a Lennar 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 Lennar contracts that collectively limit buyer remedies. A contract scan can identify all of them.