When it rains, it leaks at Bryant and Loraine Halsey's town house on Gundry Drive in Cherry Hill, a 194-unit development in Falls Church.

Water seeps between the walls upstairs, leaving a growing dark stain on their bedroom wall. During Hurricane David last month, the Halseys took to using buckets to collect rainwater leaking through their dining room window.

They and dozens of neighbors whose town houses have similarly been waterlogged at one time or another since last February have traveled a long and frustrating road in an effort to get Cherry Hill's builder, Willis and Plank Inc., to correct what they contend are construction defects in their homes.

The result has been a long and unusually bitter dispute in this normally harmonious two-square-mile city of 9.259. The homeowners' plight suggests that home buyers in the booming Northern Virginia area can expect little help from government agencies supposedly designed to protect them.

Falls Church officials conceded that the city's one-man building inspector's office overlooked apparent violations of the Virginia building code at the development -- "an apparent oversight," according to Mayor Harold L. Miller. Miller said the city often has to rely on "the good faith of the builder" in seeing that requirements are met.

"This city has the lowest effective tax rate ($1.19 per $100 assessed valued) in the metropolitan area and one of the reasons is we don't have 84 inspectors running up and down ladders everywhere," said City Attorney Paul Terrence O'Grady, who has appeared reluctant to pursue legal action against the company.

The state Department of Commerce, which licenses contractors and was asked to intervene, has been forced to demur because of a loophole in state law that apparently exempts companies such as Willis and Plank from state regulation.

Edward Andres of the state Department of Commerce said he believes Willis and Plank qualify under a state statute that exempts from regulation those housing contractors who build on land they own or who build houses worth less than $60,000.

Andres says the statute was passed two years ago by the state legislature after a strong lobbying effort by builders.

For its part, Wills and Plank, a Vienna, Va., firm, denied charges by Falls Church officials that it violated the state building code. The firm contends that officials are making the company a scapegoat for their own mistakes. The company's lawyers have accused at least six homeowners of slander and libel and have threatened legal action.

"It's one big mess" said James Griffin, a Cherry Hill homeowner. He says of Wills and Plank, "If they tell you the sky is blue, you'd better go out and check it."

For many owners, the problems started during last February's snow storms when water leaked through bedroom ceilings, walls, windows and electrical outlets. A survey by residents found 91 with complaints about leaky roofs and other defects. Owners of between 50 and 100 town houses at Cherry Hill have indicated in the past that they were interested in legal action.

The owners found that the company had neglected to install flashing -- aluminum strips designed to help protect roofs from leaking when gutters are obstructed -- on the leaves of their houses, even though the flashing had been included on building plans submitted by the company and approved by the city.

Mayor Miller estimated that the flashing originally would have cost $20 per house. To install it now in already-completed homes would cost about $150, according to Miller, and the homeowners contend that many of the houses have suffered hundreds of dollars of other damages as well.

Checking further, the owners learned that the state housing code requires that builders install flashing and do all work shown on approved plans. "approved corrosion-resistive flashing . . . shall be installed . . . continuously above all projecting wood trim; at wall and roof intersections; under built-in gutters . . ." states Section 854.9 of the code. i

Nonetheless, records show that city building inspectors certified that the town houses met building code requirements and approved dozens of occupancy certificates for the development.

Wills and Plank blamed the leakage on the bad weather, denied that flashing would have made any difference and contended it was not required by the code.

"They threw up their hands and said it (the leakage) was the good Lord's fault," Griffin said.

Residents then went to City Attorney O'Grady who, after consulting with city inspectors, fired off a strong letter to the company saying the leakage "poses a grave risk to the health and safety of the inhabitants."

The letter blamed the problem on lack of flashing, noted that the company also had neglected to install two of the three smoke detectors shown on building plans and called the omissions "violations of the law, in our judgment,"

"You are hereby ordered to immediately begin work to abate those noted violations and to repair the damage done as the result of the leakage," O'Grady wrote, noting that building code violations are misdemeanors punishable by fines of up to $1,000 for each day of violation.

Eight months later, although residents say the company has not installed flashing on many of the houses or repaired the damages, the city attorney's office has not taken legal action.

O'Grady said court action at this time could disrupt ongoing negotiations between the city, the developer and the homeowners.

Company co-owner William Plank's only comment about the negotiations was "We're willing to talk."

The homeowners say negotiations have long been stalled and that O'Grady is not doing his job.

They're paid with taxpayers' funds and are supposed to uphold the law and they refuse to do so," said town house owner Richard McCall.

After the homeowners began complaining, Wills and Plank wrote to the city requesting that the building plans be changed to eliminate flashing on the eaves. The city refused.

Flank, noting that the city building inspectors approved the town houses, insists that flashing is not required. Plank said some houses suffered leakage because of other problems the company is in the process of repairing.

As for the city, Plank said, "You have to understand, they're politicians and when things turn on them they look for a scapegoat. It happens all the time."

Anne Schiefer, presently the city's sole full-time building inspector and one of those who approved the town houses, said she has been ordered by the city attorney's office not to discuss the case.

Schiefer's only comment: "I'll be very happy when Wills and Plank finish work and leave Falls Church."

City officials say that despite the approvals, the company still must meet code standards. State officials agree.

"The simple fact is when you give a contractor a permit to build, he has to do what's on his plan," said Jack A. Proctor, state building code administrator.

But the state has refused to get involved in the controversy, despite pleas from homeowners. Proctor says he serves only in an advisory role and has no enforcement powers.

Meanwhile, the homeowners say they fear water has damaged insulation and electrical fixtures in their houses and are afraid of facing another severe winter without flashing.

"We're running out of time and it seems like no one is prepared to help us," said Loraine Halsey.