10 Things Home Builders Won't Tell You

Population growth and urban sprawl mean there’s not much residential land left in many areas these days—and what there is may not be ideal. Shortly after John Duffy and his family moved into their $234,000 home in Highlands Ranch, Colo., long cracks started showing up in the walls and the porch started pulling away from the house. After badgering his builder for the soil report, Duffy learned his lot was a hot spot for potential swell. (Writer Homes, the builder, was ordered to pay Duffy $544,000. John Palmeri, Writer’s attorney, says the company offered to fix the Duffys’ house, but “they were bent on going to court.”)

The Duffy family isn’t alone. In fact, a number of homes today are being built on “expansive soil”—earth that swells when it rains—without adequate safeguards. How common is the practice? About 50 percent of homes in Southern California are built on expansive soil, according to Patrick Catalano, founder of The Law Firm of Catalano and Catalano in San Francisco and San Diego, which specializes in real estate and construction defect litigation.

But soil isn’t the only issue when it comes to shoddy construction. In October 2007, four hillside homes built in La Jolla, Calif., slipped off their foundations, burying two other dwellings in an alley below, after a landslide that damaged some 111 homes. Catalano, who’s representing the owners of 25 of these homes, says that in about 20 percent of cases, the home builder is at fault, since the landslide occurred within 10 years of the home being built. (These cases are pending.)

Substandard work has always existed in home building, but the collapse of the housing market and the increased costs of construction are making the problem worse, says Jonathan Alpert, a retired Tampa, Fla., attorney who represented homebuyers. Alpert says he’s handled cases in which builders didn’t seal roofs, in which two-inch concrete slabs have been used instead of the four-inch slabs specified, and in which sewage pipes have been cross-connected to drinking-water pipes.

In some cases, builders are skipping steps dictated by municipal building codes. In one Sarasota, Fla., gated community called Turtle Rock, four families cut open their houses in 1998 to ferret out the source of some mold growth. What they found, in addition to wet lumber, were several code violations, including missing hurricane straps, which are steel plates that tie the wood frame together and to the concrete base. Says Brian Stirling, the structural engineer hired by the homeowners to investigate, “If we’d had a strong storm, they would have had some serious problems.” Like what? “Like losing their top floor.” In 1999 the builder, U.S. Home, agreed to buy back the four houses and said it would make county-supervised repairs on 12 others in the subdivision. “We dispute the extent of the problems,” says the builder’s attorney, Fred Zinober. But by settling the case, he says, “U.S. Home did the right thing.”

“It used to be during the housing boom that builders were cutting corners because they were putting things up as quickly as they could stand,” Alpert says. Now the issues are inflationary pressures on builders and the need to increase profits. “The cost per square foot for construction is actually increasing while home prices are decreasing,” Alpert says, “so that’s putting pressure on builders to cut corners.”

Given how complicated it is to build a home, and how serious the implications are if it’s done incorrectly, you might expect home builders to answer to rigorous regulatory authority. Think again. According to the most recent survey by the National Association of State Contractors Licensing Agencies, only 18 of the association’s 27 member states regulate home builders. And of those member states that do regulate, only 15 require any kind of exam—Arizona and Maryland being two of them—and only 13 require on-the-job experience. Two states, Louisiana and Utah, have continuing-education requirements, but they’re the exception.

But greater regulation comes with a price. “Red tape and compliance issues add cost to building a new home,” says Carlos Gutierrez, assistant staff vice president for the National Association of Home Builders (NAHB). “And that cost is inevitably passed on to the consumer in the form of a higher-priced home.” While he acknowledges that some regulation of the industry is necessary, even welcome, Gutierrez adds that “at a time when affordable housing continues to be a crisis nationwide, governments ought to be careful not to overregulate.”