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ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration
Hometown Annapolis: Buyers Beware
Thursday, 05 July 2007

Buyers Beware
You've bought a dream home - or so you thought. Now the foundation is cracking, the basement has flooded and the roof sags. Not so dreamy anymore. County residents who have spent hundreds of thousands of dollars on the biggest investment of their lives are sometimes left with a defective version of the American dream... County homeowners are experiencing a "national problem," said Janet Ahmad, president of the San Antonio-based Homeowners for Better Building. Binding arbitration issues and legislation passed to protect builders from legal retribution have made it hard for buyers to fight back, she said."It has affected the lack of quality homes and virtually made warranties absolutely worthless," she said.

You've bought a dream home - or so you thought. Now the foundation is cracking, the basement has flooded and the roof sags.
Not so dreamy anymore.

County residents who have spent hundreds of thousands of dollars on the biggest investment of their lives are sometimes left with a defective version of the American dream.

Maryland consumers filed 382 complaints for new-home construction defects from June 2004 through this month, according to the Consumer Protection Division of the Maryland Attorney General's Office.

Twenty-two of those complaints were in Anne Arundel; two in Annapolis.

County homeowners are experiencing a "national problem," said Janet Ahmad, president of the San Antonio-based Homeowners for Better Building.

Binding arbitration issues and legislation passed to protect builders from legal retribution have made it hard for buyers to fight back, she said.

"It has affected the lack of quality homes and virtually made warranties absolutely worthless," she said.

Scott McRoy learned about defective homes the hard way.

A financial adviser for Merrill Lynch, he bought a four-bedroom home for $665,000 in Gambrills in 2003. But after moving into the home, he struggled with two basement floods.

"It wasn't a sump-pump problem, it was the way the lot was graded," Mr. McRoy said. "Water was running toward the house, not away from it."

Mr. McRoy said it took six to ninth months to get a French drain installed by the builder. That still didn't make up for the $2,500 in damages.

"It's just a very aggravating process," he said, "I think most people don't follow through with it."

Many home buyers have a hard time following through because of arbitration clauses. Homebuilders can insist that buyers go through a private arbitrator instead of battling disputes in court thanks to a federal law, said Paul Bland, a staff attorney with Public Justice in Washington.

Homebuilders often write contracts with certain arbitration companies, and those firms tend to be on the side of the builder, he said.

"In the homeowner context this has become a gigantic problem," Mr. Bland said. "We are contacted again and again by homeowners who want us to help them find a lawyer to help them fight an arbitration clause."

John Kortecamp, executive vice president of the Home Builders Association of Maryland, acknowledged the issue of defective homes, but said these claims are often "unfounded."

"The bottom line is, suits are filed all the time, but that doesn't mean they are filed on good grounds," said Mr. Kortecamp, whose organization acts as an intermediary to help resolve issues between builders and buyers.

There also are national guidelines for determining exactly what constitutes a defect, he said. That provides objectivity for both the builder and buyer to a "very great degree," he said.

But a lot of defective home issues go unreported, said Frank Livingston, a former sales manager for builder NV Homes. He and Belinda Magruder, also formerly of NV Homes, broke out on their own to help buyers avoid some of the difficulties they saw them falling into before settlement.

An NV Homes spokesman declined to comment.

Now real estate agents with RE/Max Prestige in Arnold, they opened a new business called the New Home Experts, which provides free representation throughout the home-buying process, from pre-financing qualification to contract negotiation. Mr. Livingston and Ms. Magruder make sure all final corrections have been made to a home before a buyer signs the dotted line.

"In the previous market ... builders had more control of the entire process because there was always a backup buyer to every person," Mr. Livingston said. "In this market, with everyone cutting back on field personnel and cutting back in every way that they can, you need someone on your side of the negotiation."

To ensure that buyers are getting the best deal, Mr. Livingston's company delays the contract-signing process until the end of the month, typically when builders must meet their sales goals, he said.

Geaton DiZebba, president of DiZebba & Sons Inc., a custom home builder in Crownsville, said he enjoys working with home buyers represented by the New Home Experts because it sets him apart from other builders.

"It would benefit me," he said.

Shannon Oliver was helped by Mr. Livingston's skills even before he worked for NV Homes, when they met through a mutual friend. Ms. Oliver said she was a single parent in the process of buying a four-bedroom home sitting 6 feet below the water table in Edgewater's South River Colony complex. With Mr. Livingston's help, she not only got a sunroom for free at the "11th hour," but also had the house repositioned to correct the water problem.

She said she's particularly grateful for Mr. Livingston's help because two of the other homes in her cul-de-sac have flooding issues.

"Frank said ask to turn the house around or the deal is off," she said.
http://www.capitalonline.com/cgi-bin/read/2007/06_19-07/BUS

 
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