Frustrated by the high cost of housing in the Washington area, Geraldine and Lance Price of Laurel decided last year to buy a home in Mechanicsville, a rustic town of 8,000 in rural St. Mary's County. They found their dream house: a $58,500, three-bedroom rambler built especially for them. "It was beautiful," said Geraldine Price, 39.

But two weeks ago, less than a year after the Prices and their daughters Dawn, 17, and Drema, 10, moved in, a 10-by-42 foot cinderblock basement wall collapsed while the family was away.

Much of the back yard slid into the basement. Pipes burst, electrical wires were ripped out, and appliances, furniture and rugs in the basement were ruined, causing about $30,000 in damage, according to the Prices. The upper structure of the house sagged, they said, but otherwise was not damaged.

The Prices' insurer, Allstate Insurance Co., maintains that the damage was the fault of the construction company, J. W. Builders of Mechanicsville.

"Apparently, the drainage seals around the house were either non- existent or installed improperly," said Robert Schmidt, an Allstate spokesman. Rainwater settled around the house, causing the wall to collapse, he said.

But James Williams, president of the construction company, said the wall collapsed because of heavy rains, not because of defective work.

"There's a lot of people with basement damage because of the rain," Williams said. "They're not the only ones . . . I know the work was done in a satisfactory manner because I supervised it myself."

James Weber, chief of permits and inspections for St. Mary's County, said the heavy rain was responsible for the collapse of a crawlspace at a new house, built by Swarey Builders of Mechanicsville, while more than 100 basements were flooded in the Mechanicsville area after the rain.

He said Swarey Builders is providing temporary housing for the family until it can repair the house.

"I've never had anything like this happen," said Williams, president of the construction company that built the Price house. He said he has built 10 to 12 houses a year for more than a decade.

Of the Prices' uninhabitable house, he said, "I'm definitely going to move on it pretty soon, but I haven't heard from my insurance company." He said some settlement would be worked out.

David Scholten, who is investigating the incident for the construction company's insurer, State Auto Mutual Insurance Co., said, "no determination has been made one way or the other" about whether the builder is liable. "It's a matter of time and sorting all the facts out," he said.

Ben Blackman, who sold Williams the insurance policy, said, "There's no doubt that something occurred to the dwelling, but under the terms of Williams' policy we pay for third-party bodily injury or property damage. We do not cover the dwelling itself."

Meanwhile, the Price family is staying with neighbors and trying to keep up their spirits. "We're sitting out here with no home and nothing we can do about it," said Geraldine Price.

"You know," she said with a sigh, "we came out here because it's quiet and relaxing -- well, it was."