How Richmond American Homes Uses This Clause
Richmond American Homes purchase agreements have included mandatory binding arbitration provisions requiring disputes to be resolved through private arbitration rather than in court. This eliminates the buyer's right to a jury trial and may limit discovery and appeal options available in traditional litigation.
This provision typically appears within the purchase agreement alongside other terms that limit buyer remedies, including the class action waiver and liability limitation.
Richmond American Homes's scale as a subsidiary of MDC Holdings 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 arbitration clause and class action waiver work together to ensure all disputes are handled individually in private proceedings, preventing community-wide claims from being consolidated.
Standard Form Contract
This clause appears in Richmond American Homes'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 Richmond American Homes's use of this clause type.
Colorado Construction Defect Litigation — Multiple Homeowner Actions
Richmond American Homes and MDC Holdings have been named in construction defect lawsuits in Colorado. The interaction between arbitration clauses and Colorado's CDARA pre-litigation process has been a factor in how these claims are pursued.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Richmond American Homes's operating states.
| State | Status | Note |
|---|---|---|
| Colorado | Likely Enforceable | Mandatory arbitration clauses in Colorado new construction contracts are likely enforceable. Colorado follows the Federal Arbitration Act and generally upholds arbitration agreements in consumer contracts. |
| Arizona | Likely Enforceable | Mandatory arbitration clauses in Arizona new construction contracts are likely enforceable. Arizona courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
| Nevada | Likely Enforceable | Mandatory arbitration clauses in Nevada new construction contracts are likely enforceable. Nevada courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
| California | Uncertain | The enforceability of mandatory arbitration clauses in California new construction contracts is uncertain. California courts apply heightened unconscionability scrutiny to arbitration clauses in consumer adhesion contracts. |
| Oregon | Likely Enforceable | Mandatory arbitration clauses in Oregon new construction contracts are likely enforceable. Oregon courts generally uphold arbitration agreements, though unconscionability challenges are possible. |
| Washington | Likely Enforceable | Mandatory arbitration clauses in Washington new construction contracts are likely enforceable. Washington courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
| Utah | Likely Enforceable | Mandatory arbitration clauses in Utah new construction contracts are likely enforceable. Utah courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
| Idaho | Likely Enforceable | Mandatory arbitration clauses in Idaho new construction contracts are likely enforceable. Idaho courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
| Florida | Likely Enforceable | Mandatory arbitration clauses in Florida new construction contracts are likely enforceable. Florida courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
| Maryland | Likely Enforceable | Mandatory arbitration clauses in Maryland new construction contracts are likely enforceable. Maryland courts generally uphold arbitration agreements, though unconscionability challenges remain possible. |
| Virginia | Likely Enforceable | Mandatory arbitration clauses in Virginia new construction contracts are likely enforceable. Virginia courts generally uphold arbitration agreements consistent with the Federal Arbitration Act. |
Related Clauses in Richmond American Homes Contracts
This clause often works in combination with other provisions in Richmond American Homes'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.
- Request removal of the arbitration clause in writing. Even if the builder declines, having a written record of your objection may be relevant if the clause's enforceability is later challenged, particularly in California where courts apply heightened scrutiny.
- Have the full contract scanned before signing. This clause is often one of several interconnected provisions in Richmond American contracts that collectively limit buyer remedies. A contract scan can identify all of them.