Angry Homeowners Take to the Web Over Shoddy Construction
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http://news.yahoo.com/s/bw/20070807/bs_bw/aug2007db2007082138347;_ylt=A0WTUelN3LlGpWUBDRKb.HQA
Angry Homeowners Take to the Web
By Maya Roney
Tue Aug 7, 8:08 AM ET
The outside of Susan Sabin's house in Lenexa, Kan., is covered with
lemons: lemon-shaped foam cutouts, twinkling lemon Christmas lights,
and a lemon-adorned wreath on the front door. If you go to her Web
site, you can see for yourself. You'll also see photographs of
splintered beams, bowed floors, and a graphic that declares: "Pulte
Homes sold me a lemon!"
Sabin has been called crazy, but she's not the only dissatisfied
customer. The Internet has rapidly become an outlet for frustrated
homeowners to chronicle their bad experiences with new homes they have
found to be structurally defective. Homeowners can now post
complaints, discuss legal options, and warn future buyers on at least
a dozen builder-directed "gripe sites," with names such as www.crapconstruction.com
and www.khovsucks.com.
Careless Building During Boom?
As home values decrease and home sales slow in many parts of the
country, construction problems seem to have become an even bigger
concern for homeowners. "I notice the traffic has definitely picked
up," says Andy Martin, a longtime consumer advocate who runs three
sites: www.FightPulte.com, www.FightDiVosta.com and www.FightDelWebb.com.
The three sites serve as national clearinghouses for those who think
they may be victims of shoddy construction. During the housing boom,
builders were working fast to keep up with all the people gobbling up
new properties, and Martin believes the quality of building suffered
as a result. "The pendulum swung too far in (the builders') favor," he
says. "The Internet now is rising to level the playing field."
For many of the creators and visitors to these Web sites, the problem
is water intrusion and mold, brought about, they claim, by faulty
construction. Dan Wenk, creator of www.levittandsonshome.org, claims
he was not able to return to his Levitt & Sons home in central Florida
after receiving chemotherapy because his immune system could not
tolerate the elevated mold levels. "I was struggling with my life-
threatening illness and now needed to find a new place to live," he
writes.
Levitt & Sons, a subsidiary of Levitt (NYSE:LEV - News), has not tried
to stop homeowners like Wenk from using the Internet as a sounding
board. "Today consumers increasingly turn to the Internet and other
new forums to share their opinions and openly discuss products," said
Levitt & Sons President Seth Wise in regard to Wenk's site. "While at
times it may be difficult, Levitt Corporation welcomes this evolution
as it creates an open dialogue and enables our employees and
subcontractors to be accessible and accountable to all of our
homeowners."
In Lieu of Litigation
In Sabin's case, the culprit is a type of soil called fat clay that
swells excessively and has been pushing apart the frame, doors, and
ceilings of the brand new home she bought last summer. The builder,
Bloomfield (Mich.)-based Pulte Homes (NYSE:PHM - News), should have
tested the soil before constructing her house, Sabin says. Pulte has
come in to make repairs, but Sabin claims they have proved futile as
the soil continues to exert pressure on her foundation. The value of
the home has fallen nearly $120,000 in the past six months, Sabin
writes on her site. She now wants Pulte to buy back her home, but they
refuse. "I try not to be emotional, but I live in this house every
single day," Sabin says. "I have a right to be emotional about this."
But Sabin doesn't have a right to sue the builder. Not yet, anyway.
Many new-home sales contracts, including Pulte's, state that disputes
related to the purchase of the home must be settled by arbitration
before moving to court. For now, Sabin says she's content to use her
Web site to spread the word and prevent others from going through a
similar ordeal.
Pulte says it provides each new homeowner with a 50-page "Pulte
Protection Plan" detailing a limited warranty in which the builder
agrees to repairs for one year after the purchase on the house is
closed. "We have identified the problem with her home, we've developed
a plan to fix it, and we've made the offer to her to fix it, but Ms.
Sabin refuses to let us make the necessary repairs to her home," says
Mark Marymee, a spokesperson for Pulte. "If Susan Sabin had spent half
the energy working with us as she's put into her Web site, this
problem could have been resolved by now."
Builders Threaten Libel Suits
Builders do seem to be concerned about the effect of gripe sites on
their reputation. Miami-based builder Lennar (NYSE:LEN - News) has
filed more than one lawsuit against Mike Morgan, a Florida real estate
broker who runs www.defective-homes.net. In a complaint filed July 30
in Charleston County, S.C., Lennar alleges that Morgan "engaged in a
concerted scheme to defame Lennar publicly with the goal of extracting
from Lennar financial payments." On July 20, a federal magistrate
judge in Florida recommended a preliminary injunction preventing
Morgan from using the word "Lennar" in Web site domain names.
"They want me dead, there's no way around that," says Morgan, who
claims he is now bankrupt and unable to afford legal fees. "If I lose
these things, it sets precedents for every other group that has a
gripe site." If you search "Lennar" on Google (NasdaqGS:GOOG - News),
Morgan's site, which he says gets 15,000 visitors a month, comes up
near the top of the page.
Builders may be able to win a lawsuit against a poster or Web site
creator who cannot back up a statement they post online about
defective construction. "The angry homeowner who posts messages on
these sites is not protected from libel actions," says Susan Grogan
Faller, who practices First Amendment law with a focus on media and
Internet for Frost Brown Todd in Cincinnati. "False and inflammatory
statements are not protected."
Faller says she is unaware of any lawsuit in which a judgment was
taken against a poster on a real estate gripe site. But because it's
such a new area, posters and Web masters may not realize that they are
at risk. "I think people are used to the concept that someone can sue
the newspaper, or magazine, or television station for libel, but
they're not used to the concept that they themselves can be sued (for
posting on the Internet)."
Paying Complainers to Go Away
Because of the binding arbitration clause in many new-home contracts,
unsatisfied homeowners rarely make a court hearing -- or the
headlines. "I think that the problem with construction defects has
been under the radar for so long," says Nancy Seats, president of
Homeowners Against Deficient Dwellings (HADD), a nonprofit consumer
protection group for homeowners dealing with defective construction.
"People just don't understand how many people are just being
financially destroyed by bad construction and binding arbitration. But
now more and more people are going to the Internet to expose their
problems and get back at the builder."
What happens instead of a trial, Seats says, is that big builders pay
people to shut down their builder-bashing Web sites. It's true that
many links to former sites are now defunct, including the once-popular
KBHomesSucks.com. "This was the most outstanding Web site, and KB
Homes tried to sue them," Seats says. "The vast majority of (now-
defunct sites) were people that were paid to shut up and go away."
Repeated calls from BusinessWeek to KB Homes (NYSE:KBH - News) have,
as yet, gone unanswered.
Now homebuilders are hurting, leading some angry homeowners to worry
that construction defects may become even more common as builders try
to cut costs. Sales of new homes fell 6.6% in June, to an annualized
rate of 834,000, and builders have been reporting lousy earnings
numbers (see BusinessWeek.com, 7/7/07, "Homebuilders in a Hole"). "The
builders are in very precarious shape," says Martin. "It's a very
dangerous period right now in the housing industry."
For future angry homeowners, there will no doubt be plenty of new
places to complain.
Click through BusinessWeek's slide show for a look at some of the
angriest real estate gripe sites.
© 2007 BusinessWeek Online