Paul Moyer Investigates: Builder Or Buyer | NBC Southern California

Paul Moyer Investigates: Builder Or Buyer

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    NEWSLETTERS

    When you buy a new home, who's responsible if it turns out to be defective -- you or the builder? And how many repairs do you have to endure before asking the builder for big bucks in compensation?

    Feb. 2008: The following investigation puts those question to buyer and builder.

    Builder Or Buyer

    [LA] Builder Or Buyer
    When you buy a new home, who's responsible if it turns out to be defective -- you or the builder? (Published Wednesday, Oct. 15, 2008)

    PAUL MOYER: One dream house after another -- owning one of these is, for many of us, the ultimate American dream. But sometimes even a dream can turn sour.
     
    MOYER (TO ANDREW MATHEWS): Do you think they sold you a lemon?

    MATHEWS: Oh absolutely. One hundred percent.
     
    MOYER: Last summer, Andrew Mathews bought his own dream home, a $600,000 condo at Playa Vista on the Westside. The builder was the nationally known Lennar Corporation. From the moment he moved in, says Andrew, he discovered one construction flaw after another… from paint splatter… to scratched surfaces… discolored cabinets… mismatched grout… loose window liners… uneven door steps.
     
    MATHEWS: So if there was any water or rain it would come into the bedroom.
     
    One window had been installed at a crooked angle and wouldn’t close.
     
    MOYER: What I see is a window that goes like this.
     
    Repairing it would require major demolition.
     
    MATHEWS: You've got to hack into the wall. Hack it all out.
     
    MOYER: Time and again Andrew wrote complaining letters to Lennar and demanded help from its customer care department, which he said could seldom get the repair work right.

    Sometimes, he says, the repair people only made things worse.
     
    MATHEWS: Windowsills damaged after their workers were standing on them instead of them standing on a step ladder .

    MOYER: At times, he says, the repairs were even hazardous to his health, like when his shower door was repaired and fell off anyway.

    MATHEWS: It was so close to chopping off my feet.
     
    MOYER: Andrew is a would-be movie-maker and had planned to work out of his new home. But the disruptions, he says, hurt his business and his income.
     
    MATHEWS: I cannot have these people in and out of here continually.
     
    MOYER: Lennar has declined to be interviewed on camera. But in a recent letter to Mathews it says it "stands ready to make any and all necessary repairs in your home." And company records show it has made numerous repairs.
     
    In a written statement to us, Lennar describes Mathews as a "disgruntled homeowner" who's "repeatedly denied Lennar access to his home to make further… repairs."
     
    MOYER: How can they fix it if you don’t let them in?
     
    MATHEWS: If I was to quantify how many times customer care has been in here, it’s probably 70, 80, 90 times, so enough is enough.
     
    RANDALL AKERS: That customer care treadmill is what you're going to be on, unless you hire your own expert pretty early on.
     
    MOYER: Former LA Building and Safety inspector Randall Akers knows nothing about Mathews' situation or Lennar's work. But he says customer care programs have sometimes been used by other big builders as cheap band-aids for poor workmanship.
     
    AKERS: Customer care is certainly used aggressively to deal with what might be a problem that should have been corrected in the quality control aspect, during the building process.
     
    MOYER: For Andrew, the break point came last September when a downpour turned part of his unit into a flood zone.
     
    MATHEWS: I kept throwing bucket after bucket of black water
     
    MOYER: So you were bailing?

    MATHEWS: I was bailing.
     
    MOYER: According to Lennar's own documents, workers had failed to connect a drain pipe in Andrews’ wall, and there were also water and drainage problems elsewhere in the building complex. The water pored into his unit.
     
    MATHEWS: It just discharged into this room and ruined this entire wall and this entire wall had to be hacked off from here down.
     
    MOYER: Andrew moved into a hotel during the clean-up, and later sought compensation for lost time and business and the estimated lost resale value of his unit -- a whopping $264,000. According to company documents Lennar responded by making any payment conditional on his signing a confidentiality agreement.

    He refused, and eventually was reimbursed less than $6,000 for hotel bills and lodging and a few damaged items.
     
    Lennar says confidentiality agreements are "standard" in such circumstances and claims it's tried to sweeten the pie for Mathews.

    MOYER (TO MATHEWS): They offered you two months mortgage. Isn't that enough?
     
    MATHEWS: Not if you consider that I had workers in here non-stop for five months.

    MOYER: And that’s not the end of it. Mathews says he's now concerned about an on-going lawsuit involving methane issues at the site. 
     
    Playa Vista as a whole is built on methane deposits, and a court has ordered the city to conduct a new environmental study and to suspend some safety permits there. Mathews agrees with Lennar that he was told of the methane and the court ruling in these disclosure documents, but he says he was not informed of more recent allegations in the case that city officials have defied the court order by continuing to sign off on suspended permits.
     
    MATHEWS: I wasn't aware of this. This was not disclosed to me by any person.
     
    MOYER: The city denies any wrong-doing. Lennar says it's disclosed everything it's obliged to. But Mathews says another sales document issued right after the court order creates the false impression that all methane controls at Playa remained uncontested and city-approved.
     
    FRED GAINES: The greatest amount of disclosure is required in any real estate transaction.
     
    MOYER: Real estate attorney Fred Gaines doesn't know Matthews and cannot vouch for his claims. But he and fellow real estate lawyer Larry Jacobson say any material change in a legal climate of a home sale is usually disclosed to the buyer.
     
    JACOBSON: The amount of disclosure has to be enough to alert a reasonable person that there is an issue he needs to consider.

    MOYER: Lennar is no stranger to homebuyer complaints, as these local court websites make clear.

    But in its written statement the company says it "takes great pride in delivering exceptional homes and striving to keep homeowners 100 percent satisfied."

    Mathews says he remains one gigantic exception.
     
    MATHEWS: Whenever it rains I'm always opening the front door checking to see if there's any water coming in. It's like I cannot feel at ease in my own home anymore.

    Playa Vista officials maintain their site is safe, and the methane properly controlled. Lennar declines to comment on any homebuyer lawsuit it faces and has ignored our request to review repair records for its other units at Playa. A company executive says -- without offering documentation -- that over 70 of Mathews' neighbors were recently surveyed and report no current problems like those he's experienced.

    Lennar also tells us: "We have implemented rigorous quality control programs to ensure that our homeowners are happy with their Lennar homes. We take this commitment seriously..."

    <H3>Statement From John Jeffe, Lennar VP And Chief Operating Officer</H3>

    The facts show that Lennar is a leading builder of quality  homes. Lennar has delivered more than 737,000 homes in the past few decades. A very small percentage of those homes have ended up in litigation over alleged construction defects.

    As KNBC acknowledges, Andrew Mathews is not a lawyer. Lennar has consulted land-use attorneys who carefully scrutinized the Playa Vista disclosure documents and Lennar has concluded that the claims made by KNBC are false and misleading.

    Statement Regarding Disclosure<

    Statement by Jon Jaffe, Lennar VP and Chief Operating Officer

    As established by the unambiguous provisions of the following documents, Lennar expressly disclosed to Mr. Mathews on several occasions the methane mitigation measures and the court order he now contends were
    concealed from him.

    A. January 26, 2006 Playa Vista Master Disclosure Statement

    Paragraph 17(g) of the January 26, 2006 Master Disclosure Statement
    provided to Mr. Mathews clearly disclosed the methane mitigation program
    for the Playa Vista development and the court's order regarding certain
    of that program's mitigation measures.  Specifically, after referencing
    the Los Angeles Department of Building and Safety approval quoted in
    your February 21, 2008 e-mail, Paragraph 17(g) expressly (i) provides
    that "the City's methane mitigation program for Playa Vista has been the
    subject of litigation"; (ii) identifies the title and case number of the
    lawsuit in which the subject court order was entered; and (iii)
    discloses and describes the court's order vacating the City's prior
    approval of the methane mitigation measures with respect to groundwater
    dewatering, as follows:
        <BR />
    <BR />
    "As set forth in more detail in the disclosure under Section 29(a)
    below, the court of appeal in the matter of Environmentalism Through
    Inspiration and Non-Violent Action, et al. v. City of Los Angeles, et
    al., the Los Angeles Superior Court, Case No. BS 073182, concluded in
    October 2005, that the City had failed to fully comply with the
    California Environmental Quality Act (CEQA) in its approval of the Playa
    Vista methane mitigation program.  With respect to the methane
    mitigation measures themselves, the appellate court ruled there was
    substantial evidence to support the City's conclusion that 'the methane
    mitigation measures are feasible and will reduce methane concentrations
    to an insignificant level.'  However, with respect to the groundwater
    dewatering associated with the methane mitigation measures, the court
    concluded that the City did not determine whether a subsequent EIR or a
    supplement to the EIR was required.  Accordingly, the appellate court
    reversed and remanded the case to the trial court with instructions that
    the trial court 'grant the petition and issue a peremptory writ of
    mandate ordering the city to vacate its approval of the methane
    mitigation measures, for the purpose of determining whether a subsequent
    EIR or a supplemental EIR is required with respect to groundwater
    dewatering, and proceed accordingly as required by CEQA.'"  (See January
    26, 2006 Master Disclosure Statement at p. 18,  17(g) (emphasis in
    original and added)).

    As evidenced by the above disclosures, Mr. Mathews' claim that he
    somehow was not made aware of the court order requiring the trial court
    to "grant the petition and issue a peremptory writ of mandate ordering
    the city to vacate its approval of the methane mitigation measures . .
    ." lacks merit.  That is particularly true where, by signing the January
    26, 2006 Master Disclosure Statement and initialing each of its pages,
    Mr. Mathews expressly acknowledged and agreed that Lennar not only had,
    in fact, disclosed such information, but also was "not obligated to
    advise [him] of any changes to the information in th[e] Disclosure
    occurring after [January 26, 2006] . . ."-such as the trial court's
    ministerial implementation of the appellate court's order occurring
    nearly one month later on February 23, 2006, referenced in your February
    21 and February 22, 2008, e-mails.  (See January 26, 2006 Master
    Disclosure Statement at p. 1, third bullet point, and at p. 18,  17(g)).

    In addition to the disclosures made in Paragraph 17(g), Paragraph 29(a)
    of the January 26, 2006 Master Disclosure Statement details the factual
    and procedural history of the lawsuit in which the court's order was
    entered and, again, expressly discloses the entry of the court's order
    requiring the City to vacate its approval of the subject methane
    mitigation measures.  (See January 26, 2006 Master Disclosure Statement
    at pp. 24-25,  29(a)).

    For your convenience, a copy of the January 26, 2006 Master Disclosure
    Statement signed and initiated by Mr. Mathews on every page and
    containing each of the disclosures he now contends were concealed from
    him is enclosed with this correspondence.

    B. May 2006 Homebuyer Disclosure Statement for Serenade at Playa Vista

    Like the January 26, 2006 Master Disclosure Statement, the May 2006
    Disclosure Statement provided to Mr. Mathews indisputably discloses the
    litigation regarding the Playa Vista Development and the court's order
    vacating the City's approval of the methane mitigation measures
    referenced in your February 21 and February 22, 2008, e-mails.  (See May
    2006 Homebuyer Disclosure Statement at pp. 35-37, and at  119(c)).

    Moreover, contrary to Mr. Mathews' allegations, the May 2006 Homebuyer
    Disclosure Statement for Serenade also contains five pages of
    disclosures regarding the existence of methane gas in the Playa Vista
    Development and the testing, mitigation, prevention, detection and
    monitoring measures, as well as the corresponding homeowner association
    obligations implemented to deal with its presence.  (See May 2006
    Homebuyer Disclosure Statement at pp. 14-18,  53(a)-(j)).

    Mr. Mathews further was advised that he has an obligation to notify
    persons occupying his home or persons who acquire the home from him of
    the existence of methane gas and of the existence of the Mitigation
    Systems.  (See May 2006 Homebuyer Disclosure Statement at pp. 16-18,
    53(e)-(i)(ii)).  Mr. Mathews similarly was aware that the methane
    mitigation measures were hardly "non-existent" at the time he signed the
    October 16, 2006 disclosure referenced in your February 21, 2008, e-mail
    as the mitigation systems installed within the Serenade community are
    clearly identified on pages 15-16 of the same disclosure statement.
    Rather, as plainly evidenced by the relevant Los Angeles Department of
    Building and Safety ("LADBS") permits, construction of the Serenade
    methane mitigation systems commenced nearly two years earlier on October
    20, 2004, and were completed on April 9, 2007, resulting in the issuance
    of a certificate of compliance by the LADBS on April 17, 2007.  Indeed,
    Mr. Mathews' claims are further undermined by the fact that he did not
    even close escrow on his home until June 2007-at least one month after
    the May 9, 2007, issuance of the final permit alleged in your February
    21, 2008, e-mail.

    For your convenience, copies of the May 2006 Disclosure Statement signed
    and initiated on each page by Mr. Mathews and containing each of the
    foregoing disclosures, and of the above-referenced LADBS permits, are
    enclosed with this correspondence.


    C. May 24, 2006 Declaration of Covenants, Conditions and Restrictions
    and Reservation of Easements for Serenade (the "Serenade CC&Rs")

    The five pages of disclosures provided to Mr. Mathews in the May 2006
    Disclosure Statement detailed above in Section B, were again disclosed
    to him in the May 24, 2006 Serenade CC&Rs.  (See Serenade CC&Rs at pp.
    19-23, Sections 2.17.1-2.17.10).

    In addition, Mr. Mathews' obligations in his capacities as a homeowner
    and as a member of the homeowner association's Board of Directors
    similarly were disclosed in the Serenade CC&Rs.  (See Serenade CC&Rs at
    pp. 25-40).  Indeed, contrary to his allegations, the Serenade CC&Rs
    specifically provide that it is the homeowners association-and not
    individual homeowners or Board members such as Mr. Mathews- that is
    responsible for the operation, testing and maintenance of the building
    systems including, without limitation, the methane venting and
    monitoring systems referenced in your e-mails.  (See e.g., Serenade
    CC&Rs at pp. 21-22, Sections 2.14.4(c) Monitoring System, and 2.17.8,
    Monitoring of Mitigation System; pp. 34-40, and Chart on p. 36 under
    "Building Systems" heading).

    Finally, in contrast to Mr. Mathews' allegations, the Serenade CC&Rs
    also contain, among other things, specific provisions as well as 16
    pages of diagrams, setting forth and illustrating the project's
    evacuation plans in the event of a fire or other emergency.  (See
    Serenade CC&Rs at p. 46, Section 6.1.7; Exhibit "F").

    For your convenience, a copy of the May 2006 Serenade CC&Rs containing
    each of the foregoing disclosures is enclosed with this correspondence.