To prohibit offering homebuilding purchase contracts that contain in a single document both a mandatory arbitration agreement and other contract provisions, and to prohibit requiring purchasers to consent to a mandatory arbitration agreement as a condition precedent to entering into a homebuilding purchase contract.

October 7, 2005

Mr. GONZALEZ introduced the following bill; which was referred to the Committee on Financial Services

To prohibit offering homebuilding purchase contracts that contain in a single document both a mandatory arbitration agreement and other contract provisions, and to prohibit requiring purchasers to consent to a mandatory arbitration agreement as a condition precedent to entering into a homebuilding purchase contract.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `American Homebuyers Protection Act'.

SEC. 2. MANDATORY ARBITRATION AGREEMENTS.

(a) In General- No person engaged in the construction of new houses may require a purchaser to enter into a mandatory arbitration agreement as a condition precedent to entering into a contract for the purchase of a new house.

(b) Separate Documents Required- No person engaged in the construction of new houses may offer a purchaser a contract for the purchase of a new house which includes an agreement on mandatory arbitration unless such agreement is a separate document which contains only language pertaining to the mandatory arbitration agreement. The separate document containing the mandatory arbitration agreement shall also contain the following statement: `By Agreeing to Binding Arbitration You Are Giving Up Your Right To Go To Court'.

(c) Arbitrator- The mandatory arbitration agreement shall not name an independent arbitrator and shall contain a procedure that adequately guarantees the purchaser an opportunity to participate in the selection of an arbitrator which shall occur only after a dispute regarding the homebuilding contract has arisen.

(d) Enforcement- If any person violates subsection (a), (b), or (c), the agreement on mandatory arbitration will be of no effect.

END