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.
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:
"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.