Arbitration on a Dispute
--published on Q&A Forum in the San Jose Mercury News

Q: I'm 2 month's away from closing escrow on my new house, however a dispute has arisen and I'm desperately looking for advice regarding any legal recourse I may have. Before the house was built, I was walked through the models and showed by the sales representative what the various available options were. One of the options was a fireplace or a media niche at no extra cost. I chose the media niche and signed the necessary documents (I have signed copies of the options sheet and my choices). Construction started about 4 months ago and everything went as planned. All upgrades (carpets, counter tops etc) were selected and paid for by me as required. However, 2 weeks ago I got a call from the sales representative to inform me that I would not be getting a media niche after all, but rather an alcove. The sales representative admitted that she had made a mistake. Naturally, I disagreed with her "mistake" as I have signed documents and photos of the media niche as evidence. Since we could not resolve the dispute informally, I requested arbitration. The builder's written reply to my request for arbitration is that since I have not yet closed escrow, there is nothing to arbitrate and furthermore, as retribution to their mistake, he offered me $300 to have the media niche built by myself. The amount does not even cover the material costs for the media niche, let alone labor. He also offered me all my money back and to cancel the transaction should I not be happy with the offer. The obvious choice is to cancel the transaction, however with the housing market as it is in the Bay Area, it will probably take another year before a suitable house is found (if one is lucky enough to have ones name drawn from a lottery !!!). Needless to say, the equivalent house price could then be 15%-30% more. I think you can see my dilemma. My question is two fold: 1. Is a buyer not allowed to request arbitration prior to closing of escrow even though the Offer to Purchase has been signed and accepted ? 2. Should I wish to continue with the transaction, what legal action can I take to force the builder to honour the signed contract for the media niche as no one in his right mind would choose an "empty hole" (alcove) in place of a fireplace?.