KB Home to settle on statewide construction defects
KB Home to pay millions for its handling of contraction problems in Florida

Article Courtesy of The Orlando Sentinel

By Mary Shanklin

Published February 17, 2016

 

KB Home reached a settlement with the Florida Attorney General's Office involving construction defects, failure to disclosure problems to buyers and denial of home-warranty claims for 1,688 houses across the state.

At the core of the state's three-year investigation were construction defects that led to water intrusion, which leads to mold, wood rot and even structural failure, according to the state. In some cases, the builder made the appropriate fixes but in others it ignored problems and failed to inform buyers — all in violation of the Florida Deceptive and Unfair Trade Practices Act.

As a result, one of Central Florida's leading builders must repair houses that are up to 10 years old and qualify under the terms of the settlement. In addition, the Los Angeles-based builder must provide the Attorney General's office with $6.5 million, which will help repay homeowners who had to pay for their own repairs. In addition, the company must invest $17 million improving its building methods, training its work crews and using improved building materials.

The builders' acts and practices constituted "unconscionable acts or unfair or deceptive acts and trade practices," according to the complaint filed by the attorney general in Tallahassee Circuit Court on Feb. 10. The settlement was announced the next day.

"KB Home Florida has cooperated with the Attorney General's office to address issues with residential stucco performance, which we consider to be an industry-wide challenge in Florida," reads a statement from KB Home. "KB Home is committed to providing quality homes and we stand behind our product."

It went on to on to reference the company's support of state efforts to improve standards for stucco and it's new "industry-leading" warranty on the material used to cover building exterior walls.

From even before the state launched its investigation, KB Home has spent what now totals more than $71 million to reconstruct and repair damaged residences.
Specific violations cited in the complaint included:

  • Failing to disclose to certain purchasers that the homes being constructed violated applicable building codes or original building plans.

  • Denying certain consumers' warranty repair requests because they purchased distress properties or failed to maintain their homes.

Last month, KB Home reported lower-than-expected revenue for the fourth quarter, with labor shortages and inclement weather slowing completions in some areas of the country. In Central Florida, the company is constructing houses in Etowah, Eustis; Silverleaf, Sanford; Orchard Park, Winter Garden; Arbor Chase, Orlando; Mabel Bridge, Orlando; Compass Bay, Kissimmee; Enclave at Tapestry, Kissimmee; and Shingle Creek Reserve, Kissimmee.

For Orlando-area homeowners seeking repairs: 1-800-305-2246 or OrlandoCustomerService@kbhome.com .

To apply for restitution: Florida-AG-KBSettlement.com  or 1-888-210-5486.

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