Home Buyer Hidden Defects
New Home Buyer’s Have Rights :
Serious hidden defects plague many newer homes. Here’s how to avoid trouble.
Consumer Reports Quick Take
A CR investigation involving extensive interviews with home buyers, building-industry representatives, inspectors, and others has found that thousands of consumers, faced with serious defects in their new or young homes, have spent millions on repairs. The fast pace of construction during today’s building boom is a cause, experts say.
• Fifteen percent of new homes have serious problems, some inspectors say. That’s 150,000 new homes a year. Many only show up months or years after moving day.
• Your best defense: Hire a real-estate lawyer and a building-inspection engineer. A few key clauses in your contract and inspections during construction can save grief later.
• For information on what to do should you discover problems, see How to prevent trouble and If you think you have a problem.
Last year, consumers bought more than 1 million new homes in the U.S., a near record. Average sale price: $250,000. But a CR investigation has found that increasingly, buyers are discovering that their new dream home has serious defects and that they have more consumer protections for a fickle $20 toaster than for a flawed investment-of-a-lifetime.
In Oregon, a family built a semicustom home for $66,000 on a lot they owned only to discover mold in the walls four months later. Home buyers in Newark, N.J., found crumbling concrete, falling bricks, and flooded basements within months of moving into a recently built condominium complex. An Oklahoma couple says they face $60,000 in foundation and roof repairs for a house they bought new three years ago for $127,000.
And it’s not just new-home buyers who are getting stuck. One Upper Saddle River, N.J., couple is paying $375,000 to repair water damage to a five-year-old home that they bought for $1.4 million (see Synthetic stucco).
Our investigation, which included dozens of interviews with homeowners, builders, inspectors, industry representatives, government officials, and lawyers, found those defects and more in many new or young homes. Faulty foundations, serious moisture intrusion, and shoddy framing are often at the root of problems, which manifest themselves as gaping cracks, rotting walls, and windows and doors that don’t close right. Often, though, they show up months or even years after the buyer has moved in and the builder has moved on.
No one seems to be documenting the extent of the problem, yet many experts agree that construction-defect lawsuits are rising nationally. Add to that a sharp increase in toxic-mold lawsuits. Mold is often associated with moisture intrusion.
Alan Mooney, president of Criterium Engineers, a consulting-engineering firm based in Portland, Maine, with offices in 35 states, estimates that seriously defective new homes account for 15 percent of all new-home construction, or 150,000 new homes a year. “That’s a huge number,” Mooney says, adding: “I don’t think many of these houses will last 50 years.”
PROBLEM: Owners say that shortly after moving in, they found crumbling concrete, poor drainage, and loose brick facades that now must be held in place. In a partial settlement, the builder agreed to fix some problems and to reimburse the association $20,000 for previous repairs.
Mooney and others identify several contributing factors. Builders are under pressure to keep costs down so homes are affordable and profitable. Demands for energy efficiency and environmentally sound products mean that homes today are more complicated to build. During the building boom that began in the 1990s, demand has sometimes outstripped the supply of qualified laborers and quality materials.
Home builders acknowledge isolated problems, but they deny that the rate of defective homes is on the rise.
“We don’t see that there is a systematic or endemic problem,” says David Jaffe, staff vice president for construction liability and legal research at the National Association of Home Builders, whose members, most of them small contractors, are responsible for 80 percent of residential construction. “We’re always striving to improve the quality of homes,” Jaffe says.
Some home-building officials and others blame lawsuits on bounty-hunting lawyers and homeowner associations.
“The real core of the problem is a migration of trial attorneys to construction defects as a lucrative new practice area,” says Clayton Traynor, senior staff vice president of the builders’ association.
But many homeowners say they went to court because builders ignored their repeated complaints or they had nowhere else to turn. Municipal building departments are often too busy to keep up with required permits and inspections, much less investigate problems. State and federal governments have few explicit consumer protections for homeowners.
All of which makes it imperative for home buyers to be vigilant before they sign a contract or go to closing.
“People are willing to pay for Jacuzzis and marble counters, when they should be more concerned about the quality of the house,” says Betsy Pettit, architect and president of Building Science Corp., an engineering, forensics, and consulting firm based in Westford, Mass.
NINE WARNING SIGNS
Serious defects often present themselves in telltale ways. If you see one or more of the following problems in your home, hire an engineer to investigate. (See If you think you have a problem.)
1. Deep cracks in the foundation or basement walls. They can be signs that the foundation was laid on a poorly compacted base or poorly graded soil.
2. Sagging floors or leaning walls. A shifting foundation or structural problems with support beams could be to blame.
3. Windows and doors that never sit well in frames or close properly. House-framing problems may be at issue. If the beams, studs, and joists weren’t correctly sized or assembled, the whole house may not hang together well.
4. Cracks in interior walls. Wide cracks could signal a foundation problem. Generally, though, fine cracks are cosmetic, the result of normal aging.
5. Water damage. Warning signs include mold, rot, and insect infestation in exterior walls; staining, swelling and discoloration on interior walls; and a musty odor. Possible causes: improperly installed roofing, no flashing around penetrations and joints, no moisture barrier in a climate that requires it, lack of a drainage space behind brick or siding, poorly installed windows and doors, holes in siding, and trapped water-vapor condensation from heating and air conditioning.
6. Flooding, sewer and drain backups, and switched hot and cold water. Flooding and backups may result from poorly graded land or faulty sewer and water-main connections. Switched spigots may signal improperly installed plumbing.
7. Excessive heating or cooling bills. Rooms that don’t get warm or cool enough can be another signal that air ducts may be leaky or improperly connected.
8. Shorting or dead outlets. The electrical system may be installed incorrectly.
9. Lack of required permits. This indicates that building authorities have not performed the required inspections.
Why the problems? Many experts point to the country’s 10-year housing and real-estate boom. The top 100 U.S. home builders together sold an estimated 1,000 new homes a day in 2002, or one-third of all new-home sales.
That pace strained production. While home builders nurture the image of painstaking traditional craftsmanship, most new homes today are produced as if on an assembly line. Building affordable homes means being acutely aware of time and costs. Those builders that are public companies have the added pressure of shareholders to satisfy, industry executives and former employees say. Builders are completing homes in 90 to 120 days. A decade ago, the range was 120 to 200 days, according to one industry study.
“We were shooting for 60 days,” says Jim Banks, a former supervisor for an Ohio-area builder and a contributor to “HomeBuilding Pitfalls,” a book on how to avoid buying a defective tract home. “The quicker you do it, though, the more mistakes get made. Production supervisors aren’t working on just one home. They have 8 or 12 going at a time.”
Shortages of skilled tradespeople sometimes contribute to the problem of shoddy construction. In fast-growing areas, including parts of California, Florida, Nevada, and Texas, a lack of framers, plumbers, roofers, and electricians means that less-skilled or unskilled laborers may be performing this work, industry observers say. Lack of training and language barriers between construction supervisors and workers can also contribute to poor workmanship.
To lower housing costs, builders now often substitute new, less-expensive
materials for those they used in the past, industry experts say. For example, oriented strand board, a pressed-wood product made from small strands of wood, has replaced plywood as sheathing.
Some new products are better than those they replace, building representatives say. But some may not work well with other housing components or may not last as long as traditional ones. And some new materials are problematic, lawsuits suggest. For example, plastic polybutylene pipe has been the subject of product-defect lawsuits because
Also, homes are more complicated to build today because of regulations that, among other things, require homes to conserve energy.
“Home building is a complex process,” says Donna Reichle, NAHB spokeswoman. “It’s not reasonable to expect a house to be 100 percent perfect on the day that they move in.” But builders value their reputations, she says, so they generally strive to fix problems.
FEW CHECKS AND BALANCES
State and federal officials offer uneven help for home buyers w