How PulteGroup Uses This Clause
PulteGroup purchase agreements have been documented to include mandatory binding arbitration provisions. PulteGroup purchase agreements require that "any controversy, claim or dispute, arising out of or related to this agreement or buyer's purchase of the property" be resolved by binding arbitration under the Federal Arbitration Act, administered per American Arbitration Association (AAA) Construction Industry Rules. Buyers waive their right to a jury trial. The clause covers claims for death, personal injury, property damage, defective design or construction, misrepresentation, and fraud. The obligation survives closing or termination of the agreement. In Pulte Homes of Ohio v. Wilson (2015-Ohio-2407), the Ohio Eighth District Court of Appeals reviewed the enforceability of this provision. This clause has been the subject of litigation, including Del Webb Sun City Grand (Construction Defects).
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies. Because PulteGroup operates across multiple states, the enforceability and practical impact of this clause varies depending on where the home is located.
PulteGroup'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 Class Action Waiver
The class action waiver and arbitration clause work together to ensure all disputes are handled individually in private proceedings.
Standardized Across Markets
PulteGroup'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 PulteGroup'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 PulteGroup's use of this clause type.
Del Webb Sun City Grand (Construction Defects)
An arbitration brought by 460 homeowners in Sun City Grand, a Del Webb retirement community in Surprise, Arizona, resulted in a $13.6 million award ($7.9 million in damages, $5.7 million in legal costs). Defects alleged included defective windows, improperly installed stucco, expansive soil damage, cracking drywall, and deteriorating concrete foundations. In a related action, the Arizona Superior Court awarded $10.6 million to 279 additional Sun City Grand homeowners. The Arizona Court of Appeals upheld the judgment in 2015. Source: Builder Online; Construction Defect Journal.
Bernstein v. Pulte Home Company, LLC
Residents of Sun City Carolina Lakes, a community of approximately 3,000 homes in Indian Land, South Carolina, filed a proposed class action alleging that Pulte was negligent in overseeing construction on poorly compacted soils and ill-designed grading, resulting in excessive foundation movement, slab cracking, and separation. The complaint alleged Pulte failed to disclose the defects and that its practices violated South Carolina's Unfair Trade Practices Act. Pulte moved to compel individual arbitration. Source: ClassAction.org; U.S. District Court docket.
Shah v. Pulte Home Corporation (Copper Pipe Defects)
A class action involving homeowners in certain California subdivisions who alleged defective copper pipe installation resulting in pinhole leaks. The settlement class included 39 original purchasers (Arbitration Owner Subclass) and 112 subsequent owners (Non-Arbitration Owner Subclass). Deposition testimony from a Pulte contractor indicated awareness of pinhole leak problems for years before the homes were built. Source: shahcopperpipeclassaction.com.
Pulte Homes of Ohio v. Wilson
The Ohio Court of Appeals reviewed the enforceability of PulteGroup's mandatory arbitration provision after homeowners challenged it as unconscionable. The court examined whether the arbitration clause was both procedurally and substantively unconscionable, applying de novo review. The case is frequently cited in disputes over PulteGroup's standard arbitration language. Source: 2015-Ohio-2407.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects PulteGroup'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... |
| Georgia | Likely Enforceable | Mandatory arbitration clauses in Georgia new construction contracts are likely enforceable. Georgia... |
| 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... |
| 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... |
| 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.... |
| Tennessee | Likely Enforceable | Mandatory arbitration clauses in Tennessee new construction contracts are likely enforceable.... |
| Indiana | Likely Enforceable | Mandatory arbitration clauses in Indiana new construction contracts are likely enforceable. Indiana... |
| Ohio | Likely Enforceable | Mandatory arbitration clauses in Ohio new construction contracts are likely enforceable. Ohio has... |
| Pennsylvania | Likely Enforceable | Mandatory arbitration clauses in Pennsylvania new construction contracts are likely enforceable.... |
| New Jersey | Likely Enforceable | Mandatory arbitration clauses in New Jersey new construction contracts are likely enforceable,... |
| Minnesota | Likely Enforceable | Mandatory arbitration clauses in Minnesota new construction contracts are likely enforceable.... |
| Illinois | Likely Enforceable | Mandatory arbitration clauses in Illinois new construction contracts are likely enforceable.... |
| Michigan | Likely Enforceable | Mandatory arbitration clauses in Michigan new construction contracts are likely enforceable.... |
| Washington | Likely Enforceable | Mandatory arbitration clauses in Washington new construction contracts are likely enforceable.... |
| Utah | Likely Enforceable | Mandatory arbitration clauses in Utah new construction contracts are likely enforceable. Utah has... |
| Alabama | Likely Enforceable | Mandatory arbitration clauses in Alabama new construction contracts are likely enforceable. While... |
| Connecticut | Likely Enforceable | Mandatory arbitration clauses in Connecticut new construction contracts are likely enforceable.... |
Related Clauses in PulteGroup Contracts
This clause often works in combination with other provisions in PulteGroup's purchase agreements.
The class action waiver and arbitration clause work together to ensure all disputes are handled individually in private proceedings.
Challenges to the habitability waiver must be pursued in arbitration rather than court.
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 Del Webb Sun City Grand (Construction Defects) case. The Del Webb Sun City Grand (Construction Defects) ruling may be relevant to your situation. If you are buying a PulteGroup 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 PulteGroup contracts that collectively limit buyer remedies. A contract scan can identify all of them.