How Toll Brothers Uses This Clause
Toll Brothers purchase agreements have been documented to include mandatory binding arbitration provisions. Toll Brothers purchase agreements have contained arbitration clauses that require the buyer — but not Toll Brothers — to submit disputes to binding arbitration. The Fourth Circuit Court of Appeals ruled in Noohi v. Toll Bros., Inc. (2013) that this type of one-sided arbitration provision was unenforceable under Maryland law for lack of mutual consideration. Buyers lose their right to a jury trial, public proceedings, and in many cases the ability to appeal. This clause has been the subject of litigation, including Noohi v. Toll Bros., Inc..
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies. Because Toll Brothers operates across multiple states, the enforceability and practical impact of this clause varies depending on where the home is located.
As a builder operating in the upper price segments, Toll Brothers buyers may have somewhat more leverage to negotiate contract terms compared to entry-level buyers. However, the presence of this clause in standard purchase agreements means buyers should review it carefully regardless of price point.
Builder-Specific Details
Combined with Deposit Forfeiture
Disputes over deposit forfeiture must be resolved through arbitration, where the cost of pursuing a claim may exceed the deposit amount.
Standardized Across Markets
Toll Brothers'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.
Negotiation Potential
Toll Brothers operates in higher price segments where buyers may have more leverage to negotiate individual contract terms. While the clause appears in standard templates, buyers of custom or semi-custom homes may have more room to request modifications.
Legal History
The following cases involve Toll Brothers's use of this clause type.
Noohi v. Toll Bros., Inc.
In a putative class action, prospective buyers alleged Toll Brothers refused to return deposits when buyers could not obtain mortgage financing. The Fourth Circuit affirmed the district court's holding that Toll Brothers' arbitration provision was unenforceable because it required the buyer — but not the seller — to submit disputes to arbitration, lacking mutuality of consideration under Maryland law. Toll Brothers petitioned the U.S. Supreme Court for review; the petition was denied.
Pennsylvania Construction Defect Appeals
The Pennsylvania Supreme Court denied a petition from Toll Brothers to hear a consolidated appeal in more than two dozen construction defect lawsuits. The rulings in favor of homeowners in the Pennsylvania Superior Court and the Philadelphia Court of Common Pleas were left standing, including a determination that secondary homeowners could pursue claims through the court system rather than mandatory arbitration.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Toll Brothers's operating states.
| State | Status | Note |
|---|---|---|
| California | Uncertain | The enforceability of mandatory arbitration clauses in California new construction contracts is... |
| 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... |
| 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... |
| 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.... |
| 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,... |
| New York | Likely Enforceable | Mandatory arbitration clauses in New York new construction contracts are likely enforceable. New... |
| Connecticut | Likely Enforceable | Mandatory arbitration clauses in Connecticut new construction contracts are likely enforceable.... |
| 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... |
| Tennessee | Likely Enforceable | Mandatory arbitration clauses in Tennessee new construction contracts are likely enforceable.... |
| Idaho | Likely Enforceable | Mandatory arbitration clauses in Idaho new construction contracts are likely enforceable. Idaho has... |
| 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... |
| Michigan | Likely Enforceable | Mandatory arbitration clauses in Michigan new construction contracts are likely enforceable.... |
| Illinois | Likely Enforceable | Mandatory arbitration clauses in Illinois new construction contracts are likely enforceable.... |
| Delaware | Likely Enforceable | Mandatory arbitration clauses in Delaware new construction contracts are likely enforceable.... |
Related Clauses in Toll Brothers Contracts
This clause often works in combination with other provisions in Toll Brothers's purchase agreements.
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.
The class action waiver and arbitration clause work together to ensure all disputes are handled individually in private proceedings.
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 Noohi case. The Noohi v. Toll Bros., Inc. ruling may be relevant to your situation. If you are buying a Toll Brothers 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 Toll Brothers contracts that collectively limit buyer remedies. A contract scan can identify all of them.