How did Toll Brothers survive the housing slump? By keeping buyers' deposits

[Newsjock]

Source: Contra Costa Times

... Critics say and records show that Pennsylvania-based Toll Brothers -- the nation's largest luxury homebuilder, with developments in Contra Costa, Alameda, Santa Clara and San Mateo counties -- has made it a regular practice to collect forfeited deposits from prospective homebuyers. In fact, it was the builder's No. 1 source of profit during the down years of the housing market, according to a Maryland class action lawsuit.

From fiscal years 2006 to 2011, according to its own SEC reports, the publicly traded company retained $123 million in forfeited deposits from 3,300 prospective homebuyers.

Though Toll Brothers insists that it keeps deposits only when buyers violate the terms of signed contracts, an attorney who represents clients trying to recoup deposits said the builder is the most aggressive firm in the industry in resisting fair settlements and keeping deposits even when the company suffered no financial harm from a failed deal.

... One of his clients received a loan commitment from Toll Brothers that included such unrealistic conditions as his client selling his own home for $85,000 above the listed price and qualifying for a loan amount higher than any bank would offer. And when the conditions aren't met, Toll Brothers keeps the deposit.

Read more: http://www.mercurynews.com/breaking-news/ci_21173362/how-did-toll-brothers-survive-housing-slump-by

[1StrongBlackMan]

1. Two things ...

First:

Not only did Sharma lose his full deposit in arbitration, but he had to pay $5,600 in Toll Brothers arbitration costs.

Compulsory Arbitration Clauses, as the only remedy, should be outlawed for so many reasons it would be hard to find the space to list them. But I'll list two of the most important ...

1) The unequal bargaining position of the parties in terms of resources and, in most cases, sophistication;

2) Arbitation is a "captured" industry. While the arbitrators are hired by the parties, the company KNOWS the arbitators, personally if not by reputation. Imagine a prosecutor being able to pick the trial judge and your only recourse is to say, "I don't want him", but only 3 times (depending on the arbitration agreement). Besides, it is known ... Those arbitrators that rule against the industry are Alternative Despute Resolution Professors in law schools, because they can't find work as arbitrators.

"It amazes me that a lady who spills McDonald's coffee can make millions and here I have evidence in black-and-white and nothing can be done about it."

This statement indicates that the "wronged home-buyer" listens to too much rightwing radio.

[Fumesucker]

2. Your last sentence..

The rest of your points are good too..