Courtesy of The Orlando Sentinel
Published December 1, 2015
Nicely landscaped town homes at Berkshire Park near
Windermere are less than a decade old but show signs of spider-web cracking
and water damage — and owners see no fixes in sight.
Problems came to a head in the summer when homeowner association President
Jeff Tepper tried to hire painters to freshen up the buildings, but the
contractors declined the job. They were concerned the paint job would
quickly ruin because of underlying cracks and discoloration.
"These are only 4 years old, and the wood
is rotted out," Tepper said. "The stucco on them is too
thin. Water is getting in the walls."
Structural Engineering and Inspections
Inc. tested half of the community's 140 town homes in July
and found roofing was nailed incorrectly, which allowed
water intrusion, black mold, structural damage and signs of
moisture creeping into some second-floor floorboards,
Orlando attorney David Tegeler, a construction
specialist, said problems at Berkshire Park are pervasive. Each of the 71
units tested had construction flaws, and many had excessive moisture and rot
within the walls, said Tegeler. He is employed by Winter Park attorney
Michael Sasso, who represents three owners seeking arbitration, but total
numbers aren't known because the process isn't public.
Owners cannot turn to the courts for relief because their contracts with
Pulte Homes, the builder, require them to go through binding arbitration for
any issues — and to file each request individually.
Unlike a court case, arbitration is usually based on a decision by an
arbitrator who is appointed by a group, such as the American Arbitration
Association. Both sides present evidence at hearings that are conducted
outside the courts. Judges rarely consider an appeal of an arbitration
To try to resolve the matter, one homeowner paid a mandatory $1,000
arbitration filing fee to resolve problems on his town home but heard
nothing back from Pulte and ended up also paying the builder's $2,800 share
of arbitration filing fees, which the homeowner can recover. Of 140 town
homes, half were inspected by engineers, and all of those showed
construction defects. At least three unit owners are pursuing
"All of Pulte's deadlines to pay have come and gone," Sasso, who represents
homeowners there, wrote to the American Arbitration Association last month.
The contracts with Pulte do not ensure any time frame for resolution.
A Pulte spokeswoman said that even though the company calls for binding
arbitration, which limits any appeals process, "most of the time, many of
these claims are resolved through mediation and/or negotiation."
The builder scheduled a voluntary mediation for one homeowner first in
December and then rescheduled it for February. If nothing gets resolved at
mediation, then the matter will go to a binding arbitration, said
spokeswoman Valerie Dolenga.
Sasso said Pulte's actions only work to postpone much-needed repairs.
Meanwhile, the buildings degrade further, and structural problems become
even more serious, he added.
"It's a delay game," he said. "They just push it off and off and off."
Tepper, the HOA president, and his wife bought their three-bedroom unit with
1,644 square feet in 2009 for $183,000, which was about $70,000 more than
midpriced sales for condos in Metro Orlando at the time. Newly retired at
the time from a position as principal financial analyst for Suffolk County,
N.Y., he said they purchased a new home because they wanted to be free from
problems common in older homes.
Rather than banding together into one legal settlement, Berkshire Park
owners who want to complain must each file arbitration requests
individually, according to the contract they signed with the builder.
"You've got 140 Davids against a big Goliath," Sasso said.
Arbitration has become an increasingly popular dispute-resolution method in
recent years, particularly for consumer-finance companies. Consumer
advocates generally say it restricts consumer rights and remedies. The
Consumer Financial Protection Bureau earlier this year released a report
showing federal courts in some districts awarded higher damages to consumers
than arbitrators in those districts did during 2010 to 2011. Companies that
use it, though, say it's a more cost-effective way to resolve disputes than
Dolenga, of Pulte, said the company will work toward resolving owners'
"We are hopeful that a reasonable solution can be met to appropriately
address their concerns," she said.
Tepper said he has been criticized by some homeowners who fear
construction-defect conflicts will erode their values. Owners are required
by law to disclose building problems to any prospective buyers. Even short
of them disclosing, Sasso said the visible cracks would have a "chilling
effect" on sales.
"We've lost some sales here because of this," he said.