TAMPA BAY, Fla. – Thousands of homeowners will be eligible for restitution after Florida’s attorney general struck an eight-figure settlement with KB Home, one of the largest homebuilders in the Southeast, over widespread construction defects and problematic business practices. The deal comes three-and-a-half years after 10Investigates first exposed shoddy construction and questionable corporate behavior statewide.
Since 2012, 10Investigates has followed the plight of homeowners who had given up hope of ever receiving compensation for their damages: condos crumbled due to poor stucco installation; water intrusion led to severe mold; and homeowners’ attempts to get warranties honored were all-too-frequently denied.
A September 2013 investigation uncovered a lawsuit from a former KB Home human resources director alleging the home-builder knew condos at the troubled Willowbrook Townhomes in Lakewood Ranch had structural defects, but employees were ordered not to disclose them to home-buyers.
Since then, Attorney General Pam Bondi’s office launched an in-depth investigation into possible deceptive and fraudulent business practices, interviewing more than 200 KB Home homeowners. The three-year investigation culminated Thursday, with the approval of a settlement mandating KB Home complete more repairs, pay restitution, and reform company business practices to include more consumer protections.
The AG's allegations include:
- Failing to disclose to certain purchasers in Florida that the homes being constructed violated applicable building codes;
- Failing to disclose to certain purchasers in Florida that the homes being constructed did not conform with the original building plans and specifications;
- Denying certain consumers’ warranty repair requests because they purchased short sales or from banks after foreclosure proceedings, not proper exclusions under the KB HOME warranty; and
- Refusing certain consumers’ warranty repair requests due to a lack of maintenance by the homeowner when the structure’s problems were attributable to defective construction.
Anyone who has owned a KB Home built in the state of Florida since April 17, 2005 could be eligible for repairs and/or restitution; an estimated 18,000 homes were built in Florida during that time period.
Homeowners will have 18 months to file their claims, giving some homeowners more than 12 years to assess possible construction damage. 10Investigates has previously spotlighted how the state's 10-year statute of repose gives home-builders a tremendous incentive to push significant repairs off until homeowners' legal right to sue expires, a decade after the home is completed.
"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," the company wrote 10News in a prepared statement. "We share the Attorney General's interest in improving residential stucco standards in Florida, and we are proud to have implemented comprehensive stucco standards, which we are backing with a new, industry-leading warranty on stucco. KB Home is committed to providing quality homes and we stand behind our product."
SETTLEMENT DETAILS:
1. Repairs
- KB Home worked with the attorney general's office during the course of its three-year investigation to complete a reported $71 million in repairs to 1,688 Florida homes;
- KB Home will continue to make repairs to homes suffering from construction defects;
- Any homeowner seeking repairs can contact KB Home directly for a free, third-party inspection.
2. Restitution
- KB Home will pay an additional $6.5 million to cover the cost of the attorney general's investigation, and pay current and previous KB Home homeowners who have documented proof of defect-related out-of-pocket expenses; the amount of the payouts will depend on how many homeowner submit for reimbursements;
- Some single-family homeowners, as well as owners in the Willowbrook, Palm River, and Waterford complexes are eligible for additional “loss of use” restitution payments for their significant troubles and displacements during reconstruction.
3. Changes in business practices
- After the attorney general's office says homeowners' warranty claims were rejected for vague and "invalid" reasons, KB Home will be required to make major consumer-friendly reforms to its warranty procedures and new warranty agreements, including: better documentation of repair schedules; written explanations for any denials; an option to appeal to a third party if denied
- Since many of the problems involved shoddy stucco installation, KB Home is committing $17 million over the next five years to required stucco training and improved materials for all of its contractors and sub-contractors;
- KB Home will be required to use only licensed stucco contractors, with strict third-party oversight for the next three years to ensure the company adheres to all building codes.
HOW TO FILE A CLAIM
To seek repairs, homeowners should contact KB HOME to arrange an inspection. For homeowners in the Tampa area, call KB HOME at (813) 387-9600 or send an email to TampaClaims@kbhome.com. For homeowners in the Orlando area, call KB HOME at 1-800-305-2246 or send an email to OrlandoCustomerService@kbhome.com. For homeowners in the Jacksonville area, call KB HOME at (904) 596-6690 or send an email to KBJaxCustServ@kbhome.com. For locations outside of these regions, contact the closest region above for repairs.
To apply for restitution, homeowners may download and complete a claim form found at Florida-AG-KBSettlement.com or may contact the claims administrator, A.B. Data, Ltd., at 1(888) 210-5486.