Originally from: AAA Handbook on Construction Arbitration and ADR - 2nd Edition

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I. Introduction

Numerous dispute avoidance, prevention and resolution methods exist that can save time, money and relationships. This chapter examines a variant of one of these methods that proved quite successful in resolving post-construction disputes in the merchant housing setting; it involves the use of a neutral architect in a manner similar to that of a standing neutral or dispute review board.

The difference between merchant housing and most other projects involving a standing neutral is that the neutral comes on board after the construction project has already been completed and occupying home owners have lodged complaints against the developer through their home owner association (HOA).

One reason for the frequently repeated pattern of litigating disputes arising out of merchant housing projects is that the traditional relationship between the builder and owner does not exist. The builder is usually a developer—often a large entity whose focus is on market share—who builds the project for future buyers—as opposed to a contractor or tradesman retained by the owner to construct the project. The buyers—the ultimate owners—are not the traditional client, because ownership of the project does not occur until the project is completed, or nearly completed, as individual homebuyers who form an HOA typically run by a lay governing board.