Action 9 investigates faulty new home construction

Some local people have bought new homes and said that when they moved in, they discovered major problems, but can't get the builder to fix them.

Heather Rains, a realtor, bought a townhome in 2008 in Ayrsley.

Her home had such bad water damage that sheetrock fell and landed on her car.

"Frustrating is a very light word to use," Rains told Action 9 investigator Jason Stoogenke.

James Garrett bought a house in north Charlotte in 2010.

He said that about a year later, part of the floor started to buckle. An inspector checked it and blamed the builder for poor installation. Garrett said he feels like his builder let him down.

"They just came here. They just wanted to get paid and run," Garrett said.

"They're a large builder. I'm just one small homeowner"

Rains and Garrett said they continually complained to their builders, D.R. Horton and Ryan Homes, but the companies gave them the runaround for years.

"They're a large builder. I'm just one small homeowner," Rains said.

The Better Business Bureau counts roughly 150 complaints against home builders in the Charlotte area in the last 12 months.

It's not just a problem in Charlotte.

Stoogenke partnered with ABC News’ Brian Ross. Ross investigated numerous complaints from people buying new construction across the country. He told Stoogenke that many builders try to "wait out" homebuyers.

"One woman in Washington [D.C.] told us how she had 49 separate appointments. She took off a day of work every single time and, in about 40 of those, they didn't even show up," Ross said.

"David and Goliath"

Attorney Duane Shinnick represents homeowners and told Ross it's not a fair fight.

"You see it as a kind of David and Goliath?" Ross asked.  "I do," Shinnick replied.

Many builders force homeowners to go to arbitration instead of court. Arbitration is secret and often favors the builder, according to arbitrator Victoria Pynchon.

Arbitrators who come down hard on a construction company are "not going to get repeat business," she said.

The head of the National Association of Home Builders, Jerry Howard, defended mandatory arbitration clauses, but told Ross he doesn't know how often cases go that route. Ross had this exchange with him:

Ross: "You're the man who represents all the home builders. You have no..."

Howard: "No sir, not."

Ross:  "Have you ever asked?"

Howard: "Nope."

Ross: "Why not?"

Howard: "Frankly, I don't see this issue as being the crucial issue for housing in our country right now."

"You don't like it? Hit the road"

In South Carolina, the issue was crucial this year. Lawyers argued an arbitration clause was illegal because it denied a client a meaningful choice.

"Essentially, it's a take-it-or-leave-it situation, and a lack of meaningful choice is take-it-or-leave-it. You don't like it? Hit the road,” lawyer John Chakeris said.

They went all the way to the state's Supreme Court and won, but it's rare for a case to turn out that way.

Stoogenke asked Ross what's being done about this issue.

"Well, nothing really. The home builders are sort of individually operating in state-by-state. There's no national effort to go after them,” Ross said.

James Garrett isn't going after them, either. A military veteran and widower, he decided to spend time on things other than contacting Ryan Homes.

But Heather Rains is fighting. She's suing D.R. Horton and demanding that the company buy back her home.

Response

Stoogenke reached out to both D.R. Horton and Ryan Homes, but neither company responded.

D.R. Horton did send ABC News this statement:

"D.R. Horton is dedicated to superior customer service and providing families with quality homes and neighborhoods throughout the United States. As America's largest homebuilder for fifteen years in a row with over 545,000 homes closed, D.R. Horton is committed to taking care of our homeowners both during the construction of their new home and after closing. We provide a robust new home warranty for every D.R. Horton home, and when situations arise where we are not able to come to a mutual resolution, arbitration is in place to fairly and efficiently resolve the matter for all parties."

Advice

A Mecklenburg County inspector told Stoogenke what he would look for when buying new construction:

-Obtain references on the builder. Use a company that is N.C. licensed and reputable.

-Obtain references on the construction superintendent. Use someone who comes highly recommended and whose working style and approach to the project is compatible with your own.

-Consider hiring someone such as an architect, engineer, or a N.C. licensed home inspector to inspect the construction process on your behalf as the buyer. Consider having this person conduct "rough" (early construction) and "final" (end of construction) inspections, at least. You may also wish to have them conduct a footings and foundation inspection before the home goes up.

-Be sure to discuss bringing in an inspector with your builder early in the process. While most homes are under construction, they still belong to the builder, and some builders may not wish to allow third-party inspectors on-site.

To learn more, watch ABC News "Nightline" Investigation: New Home Heartbreak.

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