Special Report Part 2 - No Access to Court for Almost a Decade
Monday, 28 September 2015
New Home Nightmares: Part 2 - Living in squalor
For almost a decade, the residents of this $334,000 Bartram Springs house have lived in squalor holes punched in hallways, insulation hanging out of walls, rooms destroyed by destructive structural testing... Access to courts seems like a fundamental right, but most homebuyers give up that right voluntarily. Virtually every new home contract requires homebuyers to waive the right to sue, and instead settle any dispute in arbitration -- a private dispute resolution process that tends to limit damage awards, and is conducted in secret.
New Home Nightmares: Part 2 - Living in squalor
Anne Schindler, First Coast News
JACKSONVILLE, Fla. -- It was supposed to be their dream home backyard pool, spacious kitchen, extra bedrooms for aging parents.
But the house on Silver Glen Drive has become a homeowner's nightmare. For almost a decade, the residents of this $334,000 Bartram Springs house have lived in squalor holes punched in hallways, insulation hanging out of walls, rooms destroyed by destructive structural testing.
"It consumed me," says homeowner Carol Ecos, a registered nurse who says she missed 150 hours of work between the Summer of 2006 up until 2008 coping with construction issues. "It was affecting everything: My work, my emotional stability. It pushed me over the edge."
"Put it this way," adds her attorney, Kevin Schoeppel. "This was their dream home. They had it built to specifications, and they moved into their dream home and it turned into Swiss cheese."
And yet, in a strange way, Carol Ecos is lucky. Unlike every one of her neighbors, and just about every single new home owner in Florida, when she discovered widespread structural defects, she was allowed to sue her homebuilder.
Access to courts seems like a fundamental right, but most homebuyers give up that right voluntarily. Virtually every new home contract requires homebuyers to waive the right to sue, and instead settle any dispute in arbitration -- a private dispute resolution process that tends to limit damage awards, and is conducted in secret.
"The problem I have with arbitration is it's not an agreement both parties are making," says Barry Ansbacher, a real estate and construction lawyer who has represented both homebuilders and homeowners. He says that while buyers voluntarily sign the contract and therefore agree to the arbitration, in reality, they don't have much choice.
"It's take it or leave it," he says. People might object, but, "in the world of construction, the answer is, 'This is our form, and if you want to work with us, sign here.'"
In that respect, home contracts are as unalterable as most consumer to business deals. "Next time you go rent a car," Ansbacher jokes, "ask the person at the counter that you'd like to change paragraph three and make a tweak to paragraph seven, and you're probably going to be taking the bus."
Aside from being secret, arbitration sessions are quite different from court proceedings. They are run by panel of people with industry expertise but not necessarily any legal knowledge. There is no right to appeal. And homebuyers have little choice but to accept the outcome.
For Carol Ecos, it was literally a typo that freed her from arbitration. In standard contract language, you "waive the right" to a trial by jury. The Ecos' contract said the homeowners, "waive the right to waive the right to a trial by jury." A judge agreed the double-negative obviated the limitation.
The effect of that ruling was twofold: One, it meant all filings would be public record. Two, it allowed the homeowners to sue under the state's unlicensed contracting statue, making them eligible for triple damages, plus legal fees. (Taylor Morrison declined to discuss the case, citing ongoing litigation.)
But most homeowners aren't so lucky. The reality is that when it comes to home construction defects, repairs are so expensive, homeowners are reluctant to sue and incur legal fees. Attorney Casey Ratchford, who along with Schoeppel is representing 122 homeowners in the Bartram Springs neighborhood -- all living in Taylor Morrison homes -- re-stuccoing homes can run between $140,000 to 190,000, he notes.
"And the more they spend on an attorney, the more it eats into whatever [reimbursement] they eventually get. So they're not going to be able to recover enough to fix their houses."
Ron Woods, licensed structural engineer involved in the Bartram Springs litigation, agrees, adding that in 35 years in the business, he's never seen a homeowner recoup the full cost of a construction defect repair. "Most homeowners can't afford to make those repairs."
"Most people in America are 31 days from bankruptcy," observes Schoeppel.
Warranties would appear to cover stucco problems, but that's often not the case. Most homebuilders offer a shorter, initial warranty two years or less which expires before most stucco problems manifest themselves. (Stucco generally fails in the 5th to 7th year, which is when moisture damage to the metal lath behind causes it to corrode and break apart.) Structural warranties are longer, but are typically limited to claims that make the house uninhabitable not the case with most stucco problems.
Ecos says the company's response to her stucco problems was to offer cosmetic repairs -- to cover the problem with patch and paint, rather than strip and re-stucco the house. She says she refused because stucco doesn't adhere well over existing stucco and paint and the problem wasn't just a surface concern.
In fact, a structural survey of the Ecos house found much bigger problems. Although the two-story house was engineered for 89 hurricane rods the metal ties that connect the foundation to the roof the survey found 46 were loose and 13 simply "missing." The report concluded the house could therefore be "compromised" in a 66.8 mph wind.
"A 60-mile-per hour wind could happen in a heavy thunderstorm during the summer," says Woods.
The report concluded, "The house should not be occupied in wind events which created a three second wind gust in excess of 70 mph" a dire warning that the homeowners have simply had to live with.
"They had nowhere else to go," says Schoeppel. "We didn't know what to tell our client other than: You need to be careful in that house."
Shortly before trial, Taylor Morrison admitted the negligent construction allegations, and agreed to pay $200,000 to repair the home. But Ecos' lawyer pursued and won a separate claim against the company, alleging what happened wasn't just a mistake, but a violation of Florida law. That's because the employee whose signature appeared on the building permit for the Ecos house didn't even work for Taylor Morrison at the time. A judge agreed that meant the builder was operating as an unlicensed contractor and awarded an additional $1.16 million.
Taylor Morrison disputes that decision, and has appealed, but Carol Ecos, who has been waiting for resolution for more than 10 years, blames the company for dragging its feet through endless legal delays.
"How is that? The small guy gets screwed, but this company with billions of dollars is allowed to keep pushing it back and keep pushing it back and basically drive you into bankruptcy."