Q. In light of all the new house construction in this area, what is the proper direction for a new homeowner to pursue when he finds the builder unresponsive to warranty problems with the house he purchased? I have bought a new house which has construction problems. The builder does not respond to my letters and the "customer service" will not tackle major problems without management direction. This is an interesting Catch-22. There are several families in the same predicament in this subdivision, all with the same story. I feel that I have better protection under the consumer protection laws if I buy a $5,000 car than a $200,000 home. I hope I am wrong and seek your clarification.
A. Unfortunately, depending on the jurisdiction where you live, you may find better protection when you buy that new automobile rather than your new house.
There are a number of steps to take, both pre-settlement and post-settlement.
Before you go to settlement, of course, the very first step is to carefully read over the builder's contract. It must be pointed out that if there is anything left in that contract to protect the consumer it is probably because the builder (or his lawyer) forgot to eliminate it from the form contract. Usually, the builder has up to one year to complete the property before you can get out of the deal. Furthermore, the builder usually gives the potential home buyer a short notice period to go to settlement. Boiler-plate language in most new-construction contracts states that the builder will give the purchaser 14 days from the date the home is "substantially completed" to go to settlement. Unfortunately, there is no definitive answer as to what is "substantial" and what is not. Furthermore, the builder's contract usually states that no funds will be placed in escrow at settlement. In effect, you have to rely on the builder's goodwill and reputation to complete the various items that you may find defective when you are moving into the property.
To the extent you can negotiate some of these provisions, it is desirable to do so. If the builder is absolutely unwilling to make any modifications from his standard form contract, give serious thought to whether you want to buy that house. In my opinion, no house is worth the headache and aggravation that may follow after settlement.
When the builder gives you notice of settlement, it is recommended that you have a walk-through inspection, and it is a good idea to hire a professional inspector to accompany you on this visit. The builder should make a list of the so-called "punch-list" items, which have to be completed after settlement. Have a specific time limit for completion of these items, and to the extent that you can escrow certain funds to guarantee these corrections, it is highly desirable. Again, if the builder does not want to escrow, then if you go to settlement with problems still in the house, in effect you go at your own peril.
Read your warranty carefully. No doubt it is a limited warranty, and you should discuss the protections -- and omissions -- from that warranty with your real estate attorney before you sign the contract, and also before you go to closing.
However, you have indicated that you are already in the property and are now finding numerous problems that the builder is refusing to correct. Check with your local county to determine whether their consumer affairs office will give you assistance. Some of the jurisdictions -- such as Montgomery County -- have excellent consumer affairs operations and they do have authority to get into housing matters. The situation is varied, at best, in other jurisdictions in this area. Some consumer protection offices will not be able to help at all, while others may merely give you lip service, but not take an active role in your case. Additionally, if you suspect that there is fraud or misrepresentation on the part of the builder, then, of course, the state attorney general's office, or the local corporation counsel's office in the District may be interested in taking up the matter.
However, perhaps the most effective remedy is group action. You have indicated that there are others in your neighbhorhood who have similar problems. Invite all of your neighbors over to your house for a group meeting. Consult with your attorney, who may be interested in handling a group action. Not only will your costs be reduced as a result of the group action, but the strength of the organization will give you a little more clout.
Most builders in the Washington metropolitan area will, of course, be completely responsive to your needs. They may not fix everything to your individual satisfaction, but will make a good-faith effort to do so. For the few builders who are not responsive, you will have to resort to governmental or private legal action.
Document every conversation you have with the builder, for future reference. In fact, it often pays not to discuss anything on the telephone, but to send letters so as to have a "paper trail" in the event you need to prove your case down the road.