{"id":762,"date":"2012-08-23T08:22:27","date_gmt":"2012-08-23T14:22:27","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=762"},"modified":"2012-08-23T08:22:27","modified_gmt":"2012-08-23T14:22:27","slug":"are-residential-real-estate-contracts-outside-the-bounds-of-the-federal-arbitration-act","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/are-residential-real-estate-contracts-outside-the-bounds-of-the-federal-arbitration-act\/","title":{"rendered":"Are Residential Real Estate Contracts Outside the Bounds of the Federal Arbitration Act?"},"content":{"rendered":"<p>Liz Kramer &#8211; July 25, 2012<\/p>\n<p>The Supreme Court of South Carolina just ruled that contracts for the sale of residential property are not interstate commerce, and therefore are outside the reach of the Federal Arbitration Act. Bradley v. Brentwood Homes, Inc., __ S.E.2d __, 2012 WL 2847616 (S.C. July 11, 2012). That is a surprising result in my view, given that the FAA applies to all agreements that involve or affect interstate commerce, Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 271-72 (1995), and the Supreme Court has been largely unreceptive to states\u2019 attempts to carve out certain types of arbitration contracts (like those in nursing home contracts).<\/p>\n<p>In Bradley, the plaintiff bought a \u201ccompleted dwelling\u201d in Myrtle Beach from defendant. Two years later, the plaintiff sued in state court, alleging construction defects. The parties engaged in six months of discovery before the defendant asserted its right to arbitrate and moved to compel arbitration. The district court denied the motion, not on the basis of waiver (which would have been much simpler), but by finding that the arbitration agreement was unenforceable. It held the arbitration agreement was unenforceable under South Carolina\u2019s Uniform Arbitration Act, because it did not comply with technical requirements of that statute, and also held that the agreement did not involve interstate commerce and therefore was not covered by the Federal Arbitration Act (which would likely have made the agreement enforceable, as the FAA does not have the same technical requirements about font size, etc).<\/p>\n<p>The facts related to interstate commerce are these:<\/p>\n<p>the agreement stated that the defendant was \u201cnot acting as a contractor\u201d for the plaintiff;<\/p>\n<p>the defendant did, however, construct the home using subcontractors, materials and suppliers from outside South Carolina;<\/p>\n<p>the defendant provided a warranty from a national company; and<\/p>\n<p>the plaintiff used an out of state bank to finance the transaction.<\/p>\n<p>Despite those last three facts, the South Carolina court held that the FAA did not apply to this arbitration clause. The analysis relied heavily on the court\u2019s assessment that real estate contracts are unique; it begins with a \u201cdiscussion of the historical intrastate character of real estate transactions.\u201d To support the exceptional nature of real estate contracts, it cited a state court case from South Carolina and federal district court cases from Puerto Rico and Kentucky. The court held that none of the facts cited by the defendant (out-of-state banks, warranty programs, subcontractors, supplies) \u201cnegate the intrastate nature of the sale and purchase of residential real estate.\u201d The court was careful to narrow its ruling, however, noting that if the agreement had been for the construction of the home, instead of for the completed dwelling, its arbitration clause would have been governed by the FAA.<\/p>\n<p>Because the conventional wisdom is that the vast majority of arbitration agreements are covered by the FAA, this decision provides rare support to parties who want to keep their claims in court, despite an arbitration agreement that could be unenforceable under state law grounds.<\/p>\n<p>via <a href=\"http:\/\/www.lexology.com\/library\/detail.aspx?g=27e884e5-eafa-4d3e-8f1f-bc1b0a3e4b03&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+Other+states+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2012-07-30&amp;utm_term=\">Are residential real estate contracts outside the bounds of the Federal Arbitration Act? &#8211; Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Liz Kramer &#8211; July 25, 2012 The Supreme Court of South Carolina just ruled that contracts for the sale of residential property are not interstate commerce, and therefore are outside the reach of the Federal Arbitration Act. Bradley v. Brentwood Homes, Inc., __ S.E.2d __, 2012 WL 2847616 (S.C. July 11, 2012). That is a&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/are-residential-real-estate-contracts-outside-the-bounds-of-the-federal-arbitration-act\/\">Continue reading <span class=\"screen-reader-text\">Are Residential Real Estate Contracts Outside the Bounds of the Federal Arbitration Act?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[143],"tags":[208,209,210],"class_list":["post-762","post","type-post","status-publish","format-standard","hentry","category-real-estate","tag-federal-arbitration-act","tag-real-estate-contracts","tag-residential-real-estate","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Are Residential Real Estate Contracts Outside the Bounds of the Federal Arbitration Act? - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/are-residential-real-estate-contracts-outside-the-bounds-of-the-federal-arbitration-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are Residential Real Estate Contracts Outside the Bounds of the Federal Arbitration Act? - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Liz Kramer &#8211; July 25, 2012 The Supreme Court of South Carolina just ruled that contracts for the sale of residential property are not interstate commerce, and therefore are outside the reach of the Federal Arbitration Act. 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