12 February 2016
KB Home Agrees to $94M Settlement on Defects
By: Samantha Joseph, Daily Business Review
Withholding information from homebuyers and denying warranty coverage will cost KB Home more than $94 million.
The Los Angeles-based builder agreed to a stipulated consent decree to resolve a three-year investigation into allegations it violated Florida’s Deceptive and Unfair Trade Practices Act, the state attorney general’s office said Thursday.
The company must pay $6.5 million in restitution, $17 million to improve its business practices plus about $71 million already spent while it was under investigation.
The complaint filed with the consent decree alleges KB Home and its subsidiaries failed to disclose building code violations and departure from original building plans and specifications.
The builder was accused of failing to honor its warranty by blaming homeowners and accusing them of failing to maintain their property when construction defects were to blame for damage. The company also allegedly denied warranty repair requests from owners who bought KB houses through short sales or in foreclosure still covered by the builder’s warranty.
While under investigation, KB Home spent about $71 million to repair houses, including 1,688 properties with construction defects that led to water intrusion.
But it will have to do more.
The final judgment requires repairs on houses built in the last 10 years that meet certain criteria. The restitution order covers out-of-pocket expenses by homeowners who paid for repairs blamed on faulty construction. The company also must spend about $17 million over the next five years to improve its construction techniques, train subcontractors and use improved materials in new construction. A third-party inspector also will review KB Home’s new construction in Florida.
Samantha Joseph can be reached at 954-468-2614.
Read more: http://www.dailybusinessreview.com/id=1202749530708/KB-Home-Agrees-to-94M-Settlement-on-Defects#ixzz3zyPXnHTK