Homeowners Are Going After Shoddy Builders : Real estate: Complaints about defective construction are on the rise. And more consumers are suing the contractors or even filing fraud charges.
Complaints about housing defects, once mostly confined to builders of low-cost homes in fast-growing suburbs, have spread across the nation in recent months as owners of mid-priced and even luxury houses and condominiums complain of shoddy construction.
Jordan Clark, president of the United Homeowners Assn. in Washington, calls construction defects a “major problem” that has drawn Congress’ attention and has sparked homeowner groups from California to Florida to sue inept builders.
In California, until recently the nation’s hottest housing market, the state Contractors’ License Board says complaints against builders and home repair contractors jumped from 27,500 for the year ended June 30, 1989, to 31,000 in 1991.
“We have leaky skylights, noisy plumbing, cracked foundations and undersized wiring in kitchens,” said Leonard Chudacoff, president of the Marina Villa V Homeowners Assn., which in August settled a lawsuit against Los Angeles developer Watt Industries for $13 million.
Such problems are the legacy of the 1980s building boom, experts say. So many homes were built so fast that the production overwhelmed housing inspectors, exhausted the supply of skilled workers and taxed the ability of builders to properly supervise construction.
Those problems have been compounded by chemically treated plywood, aluminum wiring, plastic plumbing and other new materials that have sometimes proved faulty. Experts also say drug use by some construction workers has contributed to the poor workmanship.
The 1980s housing boom “was like Detroit in the 1970s, when (auto makers) were putting cars out as fast as they could and there wasn’t an emphasis on quality,” said Pasadena lawyer Lee Barker, who handled the Marina Villa V Homeowners Assn.’s lawsuit. “The developers put pressure on contractors to build homes quick and keep down the costs. They hired people who would work for a low wage and didn’t necessarily care about quality.”
Watt Industries President Ted Cox would not comment on the Villa Marina settlement, which amounts to $104,000 for each of the 125 condos built in the early 1980s.
When asked to address the issue of shoddy construction generally, he said: “I think there is always an element in the (construction) business that doesn’t do things the right way. But in most cases, there are very few real problems.”
Other industry officials agree that construction problems are not widespread, saying that housing is one of the nation’s most heavily regulated and scrutinized industries. While no national figures are available on housing defects, industry officials say a very small fraction of the 1.1 million homes built each year have significant problems.
“I have not seen any indication that there is any real rash of quality problems,” said William Young, director of consumer affairs for the National Assn. of Home Builders in Washington.
Critics say that is because the cost of litigation and the shame of discovering costly defects after living in a house for years prevents most single-family homeowners from suing builders. What’s more, shoddy builders often disband their company and form another one to avoid paying claims on defects--which range from dangerous lapses such as undersized electrical wiring and weak foundations to annoying and potentially costly problems such as leaky roofs, cracked tile and uneven framing.
But, increasingly, homeowners are pooling financial resources to fight shoddy builders. In hearings in September before the House housing subcommittee, more than 300 owners in five states came to Washington to complain about serious construction defects in their new homes.
“This is a national problem, and it’s getting worse--not better,” said Ruth S. Martin, a Cleveland physician who published a book in June that detailed her struggle to get a developer to correct major defects in her custom-built, $450,000 home.
Among the largest and most active groups is the 1,000-member North Carolina Homeowner’s Assn., formed 2 1/2 years ago “because of all the trouble homeowners in the state have had with builders,” said Jim Parker, the group’s co-founder and president.
Parker said the idea of a citizens group came after he spent $9,000 in legal fees and $5,000 on stop-gap repairs in a three-year ordeal to get a North Carolina builder to correct numerous building code violations in his new home. Parker said electrical wires in his kitchen weren’t properly sheathed in metal conduit, pipes backed up with water and sewage and the home’s foundation wasn’t sound.
“What I went through with that builder was worse than the hell I went through in Vietnam,” said Parker. “Before our group was formed, there was no place for a homeowner to turn if he had a problem with a contractor.”
In the Tampa area, Charlotte Pramik sued the builder of her $155,000 home after she moved in and found cracked tile, faulty electrical outlets and cigarette burns and spilled paint on her carpet.
“I was horrified at the condition of the house,” said Pramik, who said a settlement of the case bars her from identifying the builder. “My husband and I are in our 30s, and we worked hard for this house. But when I complained to the builder, he told us that we couldn’t expect everything to be right in a $150,000 home. He said that we were simply not in the right price range.”
Since then, she has tried to organize other Tampa-area residents, including more than 50 owners in nearby Carrollwood, Fla., who have filed a lawsuit against Pulte Home Corp. The residents allege that Pulte’s shoddy workmanship left them with leaky roofs, rotting siding and moldy walls.
Pulte, based in Bloomfield Hills, Mich., has denied the allegations, saying homeowners failed to properly maintain their homes.
Claire Stephanye of Falls Church, Va., has her own tale of woe. Her builder went out of business, leaving Stephanye’s three-bedroom home with a leaky roof, uneven floors, irregular wall studs and an undersized ceiling support beam.
She found four other homeowners allegedly victimized by the same builder. They joined together and persuaded authorities to arrest the builder on suspicion of criminal fraud. In exchange for dropping the charges, the Fairfax County prosecutor’s office got the man to pay Stephanye $10,000 of the more than $70,000 she and her husband had spent building their house.
In Southern California, complaints about construction defects surfaced against builders such as Kaufman & Broad Home Corp. in the early 1980s.
Scott Gormley, a building superintendent for Kaufman & Broad, said quality has improved since then because the recession has left more experienced construction workers available for hire by Kaufman and other big builders. But some government officials say there has been little improvement overall in the quality of construction.
“There has been a sacrifice in quality workmanship,” said Steve Kolb, a spokesman for the state Contractors’ License Board, which revoked 480 contractors’ licenses in the 12 months ended in June--mostly for shoddy work, abandonment of jobs and failure to comply with board rules. “Developers are anxious to get the job done so they can keep up their cash flow.”
San Diego lawyer Thomas E. Miller said that in the past five months, his law firm has settled three construction defect cases: Developers paid $1.9 million to homeowners in the 52-unit Devonshire Woods condominium project in San Diego, $1.35 million to the owners of 26 homes in the Sierra La Verne country club in La Verne and $1.8 million for construction defects at 22 units of the Los Rio Condominium project in Bernardo Heights.
Some experts say defects stem from shoddy workmanship and inattention to detail. But there are other reasons as well.
In the Washington area, three home builders have set aside more than $17 million to cover the costs of replacing a rapidly deteriorating fire-retardant plywood, whose use had been encouraged by some building codes. But many homeowners are having to sue recalcitrant builders or pay out of pocket to replace the plywood, which the National Assn. of Home Builders estimates was installed on 1 million roofs.
Drug and alcohol use on the job may also contribute to defects, experts say.
Many Southern California home builders post anti-drug warnings at job sites or test workers. Drugs and alcohol on the job beat out better wages and job safety as the No. 1 concern of 4,500 contractors and workers polled in western Connecticut last summer. The group included 400 non-union carpenters, 100 non-union contractors and 4,000 members of the United Brotherhood of Carpenters & Joiners Local 210.
After a spate of job accidents and complaints about poor workmanship from homeowners, John B. Clark, chairman of San Diego Fence Co., instituted a drug testing program at his company five years ago. He found that a third of his employees were using alcohol or drugs. He fired one worker who showed up at 7 a.m. one morning with a blood alcohol level of 0.22, nearly three times the legal limit for driving in California.
“There’s no way, with impaired eyes, you can get things perfectly square and perfectly plumb on a house,” said Clark, who said things have improved since he began offering drug counseling and training employees to spot impaired co-workers.
Regardless of the reason for shoddy construction, some states have begun to offer greater legal protections for homeowners.
North Carolina lawmakers recently approved legislation to help homeowners fight inept and fly-by-night builders. The measure establishes a “Homeowners Recovery Fund” to provide legal fees for homeowners who successfully sue builders later found to be insolvent.
California lawmakers have toughened disciplinary procedures for negligent contractors and set up certification standards for municipal housing inspectors.
Larry Haun, a veteran Los Angeles carpenter who taught the skill at Whittier College from 1970 to 1989, says based on his examination of building quality recently, the get-tough stance of authorities is long overdue.
“I think homeowners have a legitimate cause for griping about some new homes,” Haun said. “There’s a general sloppiness you didn’t see before. You find things are not plumb or level.”
The quality of construction work is supposed to be inspected by building and safety departments. But in the 1980s, many construction defects escaped the notice of undermanned building inspection departments.
In the metropolitan Atlanta area, where more than 120,000 new homes have been built since 1986, Cobb County’s 10 inspectors “take about 15 minutes per (house) call,” said Bob Harrison, manager of inspections. That’s an improvement over the nine minutes harried housing inspectors had three years ago but falls way short of the 40 minutes it should take to inspect the framing of a home, he said.
With criticism of the industry mounting from homeowners, a number of savvy builders--such as Chicago-based Hoffman Homes, Inco Homes in Upland and the Fieldstone Group of Cos. in Newport Beach--have instituted quality control programs to attract consumers concerned about defects.
Norman Hassinger, Hoffman’s president, said he launched a “zero-defects” program about 18 months ago that encourages subcontractors to point out and correct mistakes. He also permits buyers two inspections before closing. He said that since the program started, customer satisfaction has risen to 95% from 65%.
Ira Norris, president of Inco Homes in Upland, said a similar program has paid off for his company, which he said has never been sued by a home buyer.
“Close to 50% of our sales are from referrals, and we have found that it is more cost-effective to make sure the home is built correctly” than suffer consequences later, Norris said. “We’ve seen other builders who were so concerned with getting the house up and sold, they didn’t take the time to do the work right and ended up paying for it.”
