CONCILIATION PROCEDURE

BUILDERS ASSOCIATION OF SOUTH CENTRAL KENTUCKY 859 LOVERS LANE BOWLING GREEN, KY 42103-7903 PHONE: 270-781-3375 REGISTERED BUILDER PROGRAM CONCILIATION PROCEDURE Approved by the Registered Builder/Remodelers Committee: Date: 4/27/03 Approved by the Board of Directors: Date: 5/1/03

Page 1 CONCILIATION PROCEDURE ALL COMPLAINTS FILED AGAINST A REGISTERED BUILDER OR REMODELER SHALL BE HANDLED THROUGH THE FOLLOWING PROCESS: 1. Call and letter to builder outlining complaint as received from homeowner. Homeowner must fill out informal complaint form and form is mailed to builder by the Association. 2. Owner is asked to wait fourteen (14) days to permit action by the builder without a formal complaint being issued. 3. No formal complaint is accepted until second call is received from owner after 14-day waiting period. 4. When owner calls or writes a second time, he is sent a formal conciliation agreement form to fill out to initiate action on the complaint. a. If money is being held back from the builder, an escrow agreement is sent upon request. The owner must put such funds in trust with the Registered Builder committee of the Builders Association of South Central Kentucky, pending a decision on the case. b. Owner must sign two (2) copies of conciliation agreement stating that they will accept the suggestions of the committee. c. Copies of the plans, specifications, contract, and/or offer to purchase, and any other papers having a bearing on the complaint must be submitted by the owner. d. Homeowner submits $ 100.00 and required paperwork. 5. When all steps in number 4 are completed, the case is put on the agenda for the next Registered Builder committee meeting. 6. Two (2) inspectors are assigned to inspect if warranted and to report, in writing, at the next meeting. Arrangements will be made with the owner for a time for an inspection of the property by at least two (2) members of the committee and if necessary, an outside advisor. If an outside advisor is used, that advisor will be selected by the Registered Builder Committee. The Committee may also request the inspection be completed by members from other Home Builders Associations. 7. Committee takes action in writing to owner and builder as to work to be done. a. Itemizes individually each decision from the original complaint. b. If money is being held in escrow with the Registered Builder committee of the Builders Association of Bowling Green, it will be held there until the builder complies with all items requested by the conciliation committee. c. Legal council is not allowed during conciliation procedure. 8. The prevailing local building code and the National Association of Home Builders publication: Residential Construction Performance Guidelines will be referenced during the conciliation and will be the basis for the determination of required corrective actions. 9. The homeowner and the builder must keep all communications with each other and the Builders Association in writing, in order to avoid any misunderstandings.

Page 2 CONCILIATION PROCEDURE 10. Conciliation can be requested by the Registered Builder or Registered Remodeler members of the Association who wish to utilize the processing of a complaint from a homeowner who has purchased one of their homes with concurrence of owner and is still within the first-year warranty period. 11. If builder fails to complete his responsibility items within forty-five (45) days (subject to weather conditions or special committee consideration) he will be recommended for suspension for a period of thirty (30) days. If he does not comply during his suspension period, he shall be recommended for expulsion. 12. Appeals by a Registered Builder concerning a decision of the conciliation committee recommending suspension or expulsion must be made to the Registered Builder committee and the Board of Directors of the Builders Association of South Central Kentucky within fourteen (14) days of the decision. The decision of the Board of Directors, after this hearing, shall be final. 13. The builder and owner must agree to conciliation in accordance to the Registered Builder/Remodeler Program and sign the Conciliation Agreement. If the Registered Builder/Remodeler refuses to sign the Conciliation Agreement, he is automatically suspended from the Registered Builder/Remodeler Program and is subject to expulsion from the Builders Association of South Central Kentucky. 14. Conciliation is used only to resolve disputes concerning performance and workmanship of the building/structure. 15. The Registered Builder/Remodeler Committee, the Association or the Board of Directors, in part, or whole, may in no way be held liable for the decision or judgment of the Committee or the decision of the Board of Directors.

Builders Association of South Central Kentucky 1 of 2 859 Lovers Lane Bowling Green, KY 42103-7903 Phone: 270-781-3375 CONCILIATION PROCEDURE This form is used for the first contact that a consumer makes with the Builders Association of South Central Kentucky, concerning complaints about performance and workmanship of a Registered Builder/Remodeler who is currently a member of the Builders Association. The consumer is to fill out this form and submit it to the Builders Association office. Date: Registered Builder/Remodeler: Company Name: Name of Person Who Contracted with the above Registered Builder/Remodeler and wishes to complain: Date of Closing: Address: Cell Phone: Work Phone: Home Phone: Address of Property with Complaint Issues: Form # 101 Please list complaints below: (Attach additional pages, if needed) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Signature of Customer

Form# 101 2 of 2 This form (after completely filled out) will be mailed to the Registered Builder/ Remodeler. The Registered Builder/Remodeler has fourteen (14) days to respond to this complaint. If the complaint(s) are not resolved in the fourteen (14) days, then the customer can request a formal certification complaint package (Form # 102) to complete and submit to the Builders Association, which will start the formal Conciliation Process. The formal package (Form # 102) will not be provided to the customer until after the fourteen (14) day period. Formal Conciliation cost to the consumer: $ 100 There is no charge for submitting Form #101. For office use only: 1. Date of mailing by Builders Association to Builder: 2. Date of phone contact by Builders Association to Builder: 3. Name of person representing the Builders Association who contacts builder: 4. Date Form #101 submitted to the Builders Association by consumer:

CONCILIATION PROCEDURE FORM # 102 Page 1 This form is used as the 2nd step in the Conciliation Process. Submitting this form to the Builders Association of South Central Kentucky starts the FORMAL CONCILIATION PROCESS. All of the following requirements MUST be satisfied for the Formal Conciliation Process to begin. 1. Conciliation Form # 101 submitted. 2. The Registered Builder is given Form # 101 as submitted to the association. 3. The Registered Builder is contacted by phone. 4. A fourteen (14) day waiting period has transpired from date Builder is mailed Form # 101, until this Form (#102) is accepted by the association. 5. The Customer pays the association $ 100.00 to file Form # 102. 6. If Customer owes the Builder any money, it must be placed in escrow with the Builders Association of South Central Kentucky. 7. A copy of the following must be submitted to the Builders Association: a. Contract b. Speculations c. Plans d. Change Orders e. Any paperwork or documents deemed pertinent to this complaint, including, any correspondence between the Builder and the Customer. Date: Registered Builder/Remodeler: Registered Builder/Remodeler Address: City: State: Zip: County: Name of person who contacted with the above Registered Builder/ Remodeler and wishes to file a complaint: Name: Address: Cell Phone: Work Phone: Home Phone: Address of property's) with Complaint issues:

CONCILIATION PROCEDURE FORM # 102 Page 2 PLEASE LIST COMPLAINTS BELOW: (Attach additional pages, if needed 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

CONCILIATION PROCEDURE FORM # 102 Page 3 Is any money being withheld from the Builder? Yes [ ] No [ ] If Yes, show amount $ Date of Closing: Date of Possession: UPON RECEIPT OF ALL OF THE ABOVE ITEMS, your Builder will be contacted regarding the complaint. The Committee will then meet to review the facts, make an inspection, if necessary, and then render a decision. If it is necessary for the Committee to inspect your home in order to secure additional information, you will be contacted for assistance. If any money is being held by you (the Homeowner) from the Builder, it is a requirement of the Registered Builder/Remodeler Agreement that this money be deposited with the Builders Association of South Central Kentucky in an escrow account before your case can be considered. An Escrow Agreement Form is available upon request. This money will be release only after a final decision is made and the Builder has responded to the complaints of your case. The Committee exists to give both the Homeowner and the Builder alike, the opportunity to resolve difficult problems and to try to reach a satisfactory solution as quickly as possible. This service is available ONLY to Home Buyers who have purchased a home or had a home built or remodeled by a Registered Builder/Remodeler Member of the Builders Association of South Central Kentucky. ONLY COMPLAINTS FILED WITHIN THE ONE-YEAR WARRANTY PERIOD WILL BE AD- DRESSED. I have read and fully understand the above complaint process. Customers Name( Please Print): Signature of Customer: Date:

CONCILIATION PROCEDURE Page 4 FORM # 102 Explanation of: CONCILIATION N. O. R. A. - Notice and Opportunity to Repair Act BINDING ARBITRATION Upon completion of the work, Contractor shall execute and issue to Owner a Limited Warranty. To be effective, Contractor must have received from Owner final payment of all sums due under the Contract. The Limited Warranty shall constitute the sole warranty from Contractor to Owner and is given in lieu of all other warranties, express or implied, relating to the performance of this Contract. If Owner claims defects in the work performed, Owner and Contractor shall follow the Claims Procedures provided in the Limited Warranty, including, but not limited to the notice requirements. If Contractor fails to comply with the Limited Warranty s claims procedure, or the Owner and Contractor are unable to resolve their disputes in a manner acceptable to them,the Owner shall have the right to contact the contractors Builders Association of South Central Kentucky (the Association ) and request conciliation. The local Association shall attempt conciliation of the disputed issues. Conciliation is offered to Owners who contract with members in good standing of the Builders Association of South Central Kentucky, the Home Builders Association of Kentucky ( HBAK ) and the National Association of Home Builders ( NAHB ) only. The local Association, HBAK and NAHB do not guarantee the results of conciliation efforts nor do they in any way guarantee, expressly or impliedly, the performance of any obligation of the Builder existing prior or subsequent or as a result of the conciliation. N. O. R. A. Notice and Opportunity to Repair Act: If after Contractor completes work on the property Owner believes a construction defect exists in the work performed, Owner shall first comply with Conciliation. If these remedies do not result in a satisfactory solution, the parties shall implement the provisions of Kentucky s Notice and Opportunity to Repair Act (hereafter, NORA ) As described in bold below, to comply with NORA, Owner and Contractor shall take the following steps: 1. Owner shall describe the claim in writing in reasonable detail delivered to the Contractor. 2. Not less than twenty-one (21) days after receipt of that written notice, Contractor shall send a written response to the Owner to arrange an inspection, offer to correct the defect or compensate Owner for the defect, or state in writing an intent not to take any remedial action. THE NOTICE AND OPPORTUNITY TO REPAIR ACT CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE BUILDER OF YOUR HOME. YOU MUST DELIVER TO THE BUILDER A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR BUILDER WITH THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE BUILDER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AF- FECT YOUR ABILITY TO FILE A LAWSUIT. The Arbitration Act: If the remedies available in the Contract, in the Warranty, in Conciliation and through NORA fail to resolve the dispute, that dispute shall be submitted to binding arbitration. The arbitrator or panel of arbitrators shall be selected in accordance with the American Arbitration Association to be conducted in the county in which the property is located. The arbitrators written decision shall be binding on both parties.